June,17,2012

Three-party agreement to raise consumption tax

On June 15, the Democratic Party of Japan, the Liberal Democratic Party and the New Komeito agreed on revisions to bills for integrated reform of the social security and tax systems, thus advancing the possibility that the bill to raise consumption tax to 8% in April 2014 and 10% in 2015 October will be passed during the extended session of the Diet.

The Happiness Realization Party, however, maintains its stance that it would be an extremely imprudent measure to raise consumption tax while the economy continues to suffer from prolonged deflation. Higher consumption tax rates will stall consumer spending and further weaken the economy, leading to increased unemployment and business bankruptcies and decreased tax revenues.

Moreover, there are growing concerns of a further downturn in the global economy stemming from the EU debt crisis that originated in Greece. Pushing forward with measures to raise consumption tax at this time represents a move that is certain to aggravate deflation by curbing domestic demand, and reflects the ruling party’s lack of economic expertise. There are politicians who support the proposed hike in consumption tax as a means to prevent the “Greecification” of Japan. The Happiness Realization Party, on the contrary, views the reallocation of money collected from citizens through increased taxation as indicative of highly inefficient economic and fiscal policy, that will cause bloating of the public sector and expose Japan to the same risks as Greece. Should such a situation arise, comprehensive economic stimulus measures will need to be implemented, necessitating large-scale government spending and resulting in a drastic increase of national government debt.

Monetary easing to break out of the deflationary economy, as well as effective growth strategies are urgently needed to ensure that fiscal restructuring is achieved through higher tax revenues from stronger economic growth, rather than increased taxation.

With the exception of some factions, both the ruling and opposition parties in the Diet are vigorously promoting the proposed raise in consumption tax. Historically speaking, the parliamentary system of government was first established to enable taxpayers to prevent the abuse of tax enforcement rights by authorities. From that perspective, it is apparent that the political parties, who today are pressing for the passage of the consumption tax hike bill with no plans to seek a public mandate, have become entities that seek to misuse their tax enforcement rights, thus completely deviating from the true purpose of a parliamentary democracy.

When the Democratic Party of Japan assumed power in 2009, they pledged not to raise the consumption tax for four years. Further, during the recent deliberations to revise the bills for integrated reform of the social security and tax systems, the Liberal Democratic Party sought to eliminate the quantitative targets of the elastic clauses that were initially intended as measures to temporarily suspend any increase in consumption tax during an economic slump. These examples clearly illustrate that words used by these parties, such as “liberal” and “democratic,” are merely in name and that they have been reduced to political powers that deprive citizens of their economic rights.

Such agreements to raise taxes without public consent will accelerate “the sinking of Japan” not only economically, but also with regard to national security. China, buoyed by robust economic growth, is boosting its military strength. On the other hand, if Japan’s defense capabilities were allowed to deteriorate due to its ailing economy, China could monopolize the East Asian region, seriously raising security risks in the region.

The Happiness Realization Party will continue to take a firm stand against tax hikes, while earnestly hoping that the Diet members will exercise sound judgment and act in a sensible manner towards rejecting the consumption tax hike bill, that if passed could potentially threaten the very existence of Japan.

Shugaku Tsuiki
Party Leader
Happiness Realization Party