Calling the Kettle BlackI’ve been writing about Japanese politics quite a bit recently, and I’d like to say I had no idea it would become such a regular topic. So I’d like to apologize if I’ve bored anyone or scared them away from this site which was at one time used to discuss technology, space and only occasionally delve into politics. But at the same time, I’d like to discuss one last item on the current government’s plans before laying off the topic … until February.

Before getting too deep into this post, I’d like to say right up front that this article is laced with so much sarcasm that it might just explode. While the numerical and political content of this post is accurate, I will hope against hope that none of the consequences of improper leadership I’ve mentioned ever come to pass.

Japan’s Consumption Tax

Japan Currently has one of the lowest consumption tax rates in the world, fixed at 5%. Nations like Sweden, with their 25% tax level, laugh when they hear of another country like this one complain about a tax increase of a few points. But it’s not something they need to laugh at Japan for. Our puny 5% will likely remain so at least until the 2010 fiscal year begins in April of that year.

This is good news for consumers as well as the current LDP (Liberal Democratic Party) government as it means we won’t be severely burdened during the coming economic down-turn, and the ministers in the Upper House may hold off on a non-confidence vote ushering in yet another snap election. This last point is especially important as the campaign trucks that drive around the towns and neighbourhoods with their loudspeakers blaring are only barely less annoying than those punk ass kids with their customized cars and annoyingly high-pitched (or stupidly loud) mufflers.

If any punk ass kids with annoying mufflers are reading this, please realize that a noisy car is not necessarily a faster car. All you’re doing is helping the cops find you in a crowded parking lot, so get a real muffler and learn that a silent car is actually better when you’re trying to hide from “the man”.

Alas, I’ve strayed off topic….

How Else is a Consumption Tax Freeze Good?

By freezing the Consumption Tax at 5%, the government is practically forcing itself to use the federal coffers responsibly. The pension fund is currently 39% funded by the federal government and this is going to be slowly increased to 50% by 2010. By not raising taxes, the finance minister will need to use some creative accounting practices in order to balance the books. I’m thinking we can do away with some social services like subsidized housing for low-income households and those costly senior citizen programs. Why should those that pay the least tax receive the lion’s share of social money, after all? It’s not like they’ll ever repay the citizens of Japan for affording them a better lifestyle. Besides, we have to keep the Americans happy by supplying their warships with free fuel in the Indian Ocean for the next two or three years. We can’t be bothered with projects that have no measurable ROI (Return on Investment).

Let’s also look at the political benefits of maintaining a 5% tax rate. The Fukuda government has recently dipped below a 50% approval rating for the first time. On top of this, the opposition party has already proven that they’ll fight anything they think is unfair to the Japanese people. If this tax hike were to come up for deliberation now, especially when the LDP is pushing to extend the Special Provisional Taxation Measures Law on gasoline for another decade, they run the risk of facing a non-confidence vote which would force a snap election for the Lower House. What kind of campaign would the currently ruling LDP offer? “Vote for us! We’ll raise your taxes and keep on hiding our excessive corruption due to our 50 years of unchecked power!”

Something tells me that wouldn’t work out very well for the Liberal Democratic Party of Japan.

In the world of politics, everything relies on image. Prime Minister Fukuda is no idiot and was exploring the possibility of an increase while Shinzo Abe was in power. Unfortunately, his party has already told him not to continue the exploration of a Consumption Tax increase despite the need to ensure the pension system remains funded and reliable. Having spent his entire political life near the inner-circle of the LDP, Fukuda knows what happens to those who don’t follow the party’s wishes.

Therefore, Consumption Tax will remain 5% until at least 2010.

The Economic Downturn

Could this have come at a better time? I don’t think so.

With consumers losing confidence in the economy and unhappy with the continued cost of living increases and piss-poor interest rates on savings accounts, people are starting to think twice before buying that new Billy Blanks Taebo DVD. What does this mean for the Consumption Tax? It means the current annual collection of 10.9 Trillion Yen (approximately $100-billion USD) will fall to about 7.2 Trillion. A drop of more than 30% will give the feds the out they need before committing to pay 50% towards the pension checks sent to more than 25-million senior citizens.

With this lack of available funds, the LDP can go back on their word (and the Pension Fund Law they passed three years ago) by legally reducing their contribution to this royally messed up system. This will force the Ministry of Health and Welfare to postpone any cost-of-living increases to those who can lease afford it, forcing citizens to consider ‘less favourable options’ to solve their problems.

What? You gasp. Surely you don’t mean–

Honorably Easing Society’s Burden

The elderly have been doing this for countless centuries already, so just think about how much this could solve Japan’s “aging population” problem. As of 2005, the average age in this country was 43.2 years. By 202 this will raise to 51. This is not a very profitable statistic to have associated with your country. And, because the pension system simply cannot support such a large number of people with so few working, think of how a cost-of-living increase freeze could initiate a ‘population self-correction’.

By the time this heinous act of inattention is picked up by the local media, who might actually feel this was important enough to pull us away from our celebrity restaurant reviews and game shows to voice their quiet rage, the government could effectively (and indirectly) cull a few million of the poorest pensioners. This, of course, would be blamed on the sluggish economy and the low 5% Consumption Tax.

You can see where I’m going with this, right?

Raising Taxes With Popular Consent

Now the population wants the government in power (probably still the LDP because they kept taxes low and marketed themselves as fiscally responsible) to raise the Consumption Tax in order to combat this travesty of justice. This isn’t because we’re worried that the elderly will take themselves out of the picture rather than impose on their children. No … this is far more sinister. People will e worried more about their own fast-approaching retirement and want to ensure a decent pension check with reasonable cost-of-living increases so we can enjoy our Golden Years. It would also be nice to get something back from the government after paying into the system for 40+ years.

Current estimates show that the tax needs to be 12% by 2020 in order to effectively handle the millions of people due to reture between now and then. Since most people would be opposed to an overnight increase, the feds would promise to raise the tax annually by 3.5% over two years.

Everyone agrees, and the politicians look like heroes. Everybody forgets that the problem was initially created by a government that was too afraid of losing control of the Parliament back in 2008, and we get on with our lives secure in the knowledge that our pension checks will not bounce.

It’s now 2015 and the sluggish economy is looking bright, thanks in part to the booming “Green Energy” sector. So to celebrate our national pension fund victory we indulge in one of the two great Japanese passtimes: baseball and shopping.