The Main Committee of the Tax Commission met on 27th May 2003.
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1. | Professor Ishi, Chair of the Commission, and Professor Okuno, Chair of the Sub-Committee on the Taxation of Financial Assets, made presentations on the subject of the study trips to Canada and the US, and Denmark and Sweden. For further details of these trips, please see http://pbcms.mof.go.jp/wce/jsp/tc030516.htm | |
2. | The proceedings of the Sub-Committee on the Taxation of Financial Assets and the Sub-Committee on Fundamental Issues were reported on and then discussed by members of the Committee. Opinions expressed included the following: | |
 | Regarding the Mid-Term Report of the Tax Commission, the main focus should be on tax reforms which take into account the background of an aging society in seeking to revitalize the socio-economic situation | |
| On the subject of personal income tax, the basic principles should be (i) to broaden the tax base so as to increase inter-generational fairness and ensure the vitality of the socio-economy, and (ii) to ensure fairness in the way the tax burden is spread between various types of household, whilst constructing a tax system which ensures neutrality between the economic and social choices that taxpayers might make | |
| Concerning the taxation of pension income, it is necessary to tax those pensioners who have a reasonable income at an appropriate level, whilst ensuring the burden is fairly spread between members of the same generation | |
| Other points of discussion in the area of personal taxation included review of the structure of personal allowances, review of the taxation of wage income, and review of tax-exempt income (broadening the tax base) | |
| Regarding consumption tax, this tax is important for its role in ensuring fiscal sustainability and allowing for an increase in social security expenditure. Henceforth, it will be necessary, while gaining the understanding of the public, to raise the tax rate, and give the consumption tax a larger role in the overall tax system | |
| With regard to corporation tax, the level of national corporation tax is not out of line with that of other advanced countries. Regarding the possibility of reducing the tax rate, it will be necessary to consider economic conditions, the level of taxation in other advanced countries, the tax burden and the role of corporation tax in the overall tax system | |
| The basic principles in the area of inheritance tax and gift tax are that against the background of an aging society and the development of a stock economy, the fiscal year 2003 tax reforms combined gift tax and inheritance tax. Henceforth, it will be necessary to achieve the redistribution of assets through the proper use of an adequately functioning inheritance tax | |
| The relationship between national and local taxation. Regarding the reform of national treasury grants-in-aid and local allocation tax and the reallocation of tax-raising powers between national and local governments, it will be necessary to consider the reform of all three areas at once | |
| With regard to the taxation of financial assets, it is necessary to consider the unification of taxation, whilst going into detail on various questions | |
| Concerning Taxpayer Identification Numbers (TINs), where a taxpayer elects to use a TIN, increasing the taxpayer’s convenience in making tax declarations should be considered. It is important to deepen the public’s understanding of the TIN system | |
| In the area of environmental taxation a wide ranging discussion is necessary | |
3. | The drafting committee will prepare a draft of the Mid-Term Report, and the Main Committee will meet on June 6th to discuss this. | |
Records (in Japanese) of the meetings of the Tax Commission and its Sub－Committees can be found at http://www.mof.go.jp/tax_policy/tax_reform/trend/index.html | ||
Further details of the fiscal year 2003 tax reforms can be found in English at http://www.mof.go.jp/english/tax_policy/tax_reform/fy2003/index.htm | ||
| Japanese documents, which go into more detail, can be found at http://www.mof.go.jp/tax_policy/tax_reform/outline/index.html | ||
