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Finance Ministry
Publishers group requests consumption tax relief

With the consumption tax set to rise from eight to 10 percent in October, a publishers group has requested that the govern-ment seriously consider sparing books and maga-zines from the hike. To justify the request, the group claims that newspapers, books, and magazines convey knowledge and, therefore, should be taxed at a lower rate. However, the administration of Japanese Prime Minister Shinzo Abe and the Ministry of Finance are reluctant to make new sectors eligible for tax reductions—and the rift appears deep.

Tax relief for books and magazines was first proposed in a 2016 revision of the tax law. Such action continues to be under review, with publishers’ organizations going so far as to propose creation of a method for categorizing so-called “harmful” publications (e.g. pornography) that would be excluded from favorable treatment.

A committee comprising non-governmental parties, such as educational institutions, would draw up standards for the “harmful” publications and label books as eligible for tax relief using a self-imposed publishing ethics code. In cases where labeled books are suspected of not being eligible, the committee would deliberate and have the authority to increase the tax rate.

Publishers’ groups began lobbying in the summer, proposing guidelines to heads of the governing party’s tax system review group. They have also been putting pressure on former Minister of Education, Culture, Sports, Science and Technology Takeo Kawamura, who currently serves as chairman of the nonpartisan Characters Culture Promotion Organization and appears to favor a tax break for publications.

The Ministry of Finance, however, is reinforcing its opposition. A high-ranking official at the tax bureau, disinclined to accept the group’s requests, was quoted as saying: “The section of Japan’s Constitution as relates to taxation provides for setting tax rates by law. It would violate the Constitution to have a public organization determine the tax rate for each book.”

The group, however, has refused to back down. It pointed out that the Japanese Olympic Committee—a public organization—has been granted the authority to grant tax-free monetary rewards to athletes. “So, if a private group can be recognized as having the right to tax-free status, there should be no problem for another group to categorize the tax rates on books.”

Should this happen, however, the ministry fears that application of different tax rates would wreak havoc on the retailing and distribution trade. At this point, it seems no end of the standoff between the ministry and publishers is in sight.

Cabinet Office
New Cabinet makes changes to social welfare and economy and trade

On October 2, the fourth Cabinet of Prime Minister Shinzo Abe was launched, and Toshimitsu Motegi—previously entrusted with economic and fiscal policy—will head two ministries: one related to social welfare and the other to trade and industry. The dual role will give him added influence within the Cabinet.

It was announced that Abe had created a special post for Motegi, essentially “minister for social welfare spanning all age groups.” As Japan’s society ages, the cost of health-care and pensions will balloon and the number of younger workers paying into the system will decline. It will, therefore, be desirable to shift to a welfare system designed for all generations rather than maintaining one structured to benefit only the elderly. More specifically, this calls for revisions in the working system to create a society of people in lifelong active service.

At a government conference entitled “Investment Plan for the Future,” Motegi began pitching a comprehensive plan. He has also been entrusted as Japan’s trade negotiator with the United States. Talks began in September, and Japan has already agreed, in principle, to reduce import tariffs on agricultural goods via the Trade Agreement on Goods (TAG). From his success in pushing through the Trans-Pacific Partnership (TPP) minus the United States, Motegi has already esta-b-lished a reputation as a tough negotiator.

Through the TAG, Japan was able to avoid imposition of higher US tariffs on Japanese cars. But it is highly likely that more market-opening pressures will be forthcoming. How Motegi deals with these will be a test of his mettle as a negotiator.

keizaikai magazine