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Ministry of Finance
Cabinet may take control of tax system

It appears likely that reforms proposed in December will lead to control of Japan’s tax system being shifted completely to the Cabinet Office. The move is said to be spearheaded by tax policy panel Chair Akira Amari, who is close to Prime Minister Shinzo Abe and also holds the post of Minister in charge of Economic Revitalization/Total Reform of Social Security and Tax.

The Liberal Democratic Party’s tax policy panel is considered a sanctuary whose autho­rity is said to be impervious to challenges from the prime minister or Cabinet. Amari’s actions represent a departure from those of its tax executive group, nicknamed “the inner sanctum,” which, in the past, has convened in secret each year to discuss tax reforms.

The changes would include a tax cut for promoting dissemination of the next-generation 5G communications protocol, as proposed by the Ministry of Economy, Trade and Industry (METI). The initial proposed write-off of nine percent has been boosted to 15 percent—a change based on Amari’s decision that reflects the position of the Cabinet.

To emphasize impartiality, Amari has abandoned the previous practice of keeping the panel’s deliberations as secret as possible, and no grassroots debates were conducted among the members of the inner sanctum. He is also working to bring about an open innovation tax system that would encourage businesses to put more of their internal capital holdings into circulation.

Since Abe formed his second Cabinet in 2012, the tax policy panels have been headed by two career bureaucrats with ties to the Ministry of Finance: Takeshi Noda and Yoichi Miyazawa. Amari, who has close ties to METI, was appointed to the post in September. Com­pared with his predecessors, he is inclined to place greater emphasis on tax reforms as a means of buoying economic growth.

As one of his first moves in the direction of tax reforms for the 2020 fiscal year, Amari has embarked on a number of personnel changes. The makeup of the inner sanctum has been changed from a fixed number of nine members to a maximum of 40, and he plans to add IT-savvy individuals cognizant of next-generation technology. The goal is to boost the panel’s flexibility and enhance transparency of the personnel system.

 

Ministry of Land, Infrastructure, Transport and Tourism
Saga, Shizuoka rail plans remain stalled
Confusion persists over two rail projects: the Linear Chuo Shinkansen linking Tokyo to Osaka via high-speed magnetic levitation technology, and the Nagasaki Route in Saga Prefecture on the island of Kyushu. Both appear to be plagued by confusion that will delay the start of construction. Of the two, the Kyushu project seems to have a better chance of moving forward thanks to the close ties between Saga’s governor Yoshinori Yamaguchi and the national government.
After a meeting on December 12, guidelines for a project plan that would use a full standard shinkansen, as requested by Yamaguchi, in effect reverted to a blank slate. The planners will go back to the drawing board to consider all options, including a lower-cost mini-shinkansen compatible with standard narrow-gauge tracks. While this leaves the next move uncertain, Saga may view it as a victory since it, essentially, ensures that the line will be extended in one form or another.
Shizuoka Prefecture has also been locking horns with the Ministry of Land, Infrastructure, Transport and Tourism (MLITT), and various bureaucrats had initially complained that they “couldn’t figure out what Shizuoka wants.” The prefecture has asked JR Tokai to carry out construction in a way that ensures all the spring water flowing from the Southern Alps is directed back to the Oikawa River. But JR Tokai has held firm to its position that this would be difficult, leading Shizuoka Governor Heitaro Kawakatsu to hold up the start of construction.
Shizuoka has called on MLITT to mediate the dispute, but its bureaucrats have report­edly said that the two parties should resolve the matter between themselves.
When considered only in terms of the positive impact the new lines are likely to have on Japan’s overall economy, the clue to resolving the issue is likely to be found in the power of MLITT and the Cabinet Office.

keizaikai magazine