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On February 24, the DPJ and the JIP jointly submitted a bill proposing refundable tax credits and a bill establishing tax system measures to correct inequalities to the House of Representatives. The legislation was submitted by DPJ Tax System Research Committee Chair Motohisa Furukawa and others.
The bill proposing refundable tax credits (intended to alleviate the recessitivity of the consumption tax) is a counterproposal to the government’s legislation proposing reduced tax rates. It stipulates the necessary basic provisions for introducing refundable tax credits as a means of combatting consumption tax recessitivity, such as conditions for granting, basic amounts and period of implementation.
Furukawa stressed that, “We will be able to focus on effectively easing consumption tax recessitivity for those on lower incomes. Businesses that are responsible for paying consumption tax will not need to shoulder this burden. Compared with reduced tax rates, a large amount of financial resources will not be required. In many respects, such as the fact that it will not be necessary to distinguish those products that will be subject to reduced rates, refundable tax credits are superior to reduced tax rates.
The bill proposing tax system measures to correct income inequalities is a counterproposal to the government’s tax reform proposal for fiscal 2016. In order to correct inequalities and achieve economic growth, the legislation proposes: (1) to abolish the automobile acquisition tax and related measures, (2) to consider and implement personal income taxation reforms and asset taxation reforms, and (3) to postpone reducing the effective corporate tax rate.
Furukawa explained the purpose of this legislation as follows: “In view of widening asset inequalities, this legislation proposes reform of asset taxation and does not target fiscal consolidation. We will aim tax revenues at measures for alleviating child poverty, those on low incomes and the weak in our society.”
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