Archive for the ‘News’ Category

Are Japan’s public school teachers paid too much?

Monday, November 17th, 2014

Japanese teachers make more money than the world average, but they also work many more hours. (Photo by ajari CC by 2.0

Japanese teachers make more money than the world average, but they also work many more hours. (Photo by ajari CC by 2.0)

Last month the Ministry of Finance presented a policy recommendation based on studies made by an advisory group. Such recommendations are fairly common, but this one caught more than the usual amount of attention because of where it was directed.

The ministry thinks that the maximum class size for first year elementary school students should be increased from 35 to 40. In purely economic terms, such a change would result in a reduction of as many as 4,000 teachers, which would translate as ¥8.6 billion in savings for the central government alone. However, the ministry’s explanation for why the change should be implemented was not made in fiscal terms. It was made in educational terms.

Until the Democratic Party of Japan became the ruling party, maximum class size was 40, and the DPJ changed it to 35 in order to address the bullying problem. But the finance ministry says that bullying incidents have increased slightly since class sizes were reduced, so obviously it has had no effect.

CONTINUE READING about education budgets

The case for a higher consumption tax

Tuesday, November 4th, 2014

Big needs: Should daily necessities by exempt from the consumption tax?

Big needs: Should daily necessities by exempt from the consumption tax?

Right now the government is fretting over whether or not to raise the consumption tax to its planned level of 10 percent in October of next year. For a while it seemed like a sure thing, but the drop in demand that accompanied the most recent hike to 8 percent in April, coupled with less inflation than the administration and the Bank of Japan had hoped for, has put the plan into doubt. The fear is that another boost in the tax will send the economy into a recessionary tailspin.

Akira Sugawara, a high school teacher who has published an economics primer for businessmen, recently wrote a simple, easy-to-understand polemic in favor of raising the tax for the online version of the business magazine Toyo Keizai. In line with his mission to explain economic principles to people who don’t have a strong grasp of basics, Sugawara starts out by explaining what the consumption tax is supposed to do, rather than what it is actually doing.

Originally, the purpose of the tax was to bolster social security in the face of a rapidly aging society, and though so far revenues from the tax have been used to pay off Japan’s massive debt, Sugawara still thinks social security should be prioritized when discussing the consumption tax.

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Political gift culture refuses to die

Tuesday, October 21st, 2014

Former Justice Minister Midori Matsushima faces the error of her campaigning ways in the Lower House on Oct. 15. | KYODO

Former Justice Minister Midori Matsushima faces the error of her campaigning ways in the Lower House on Oct. 15. | KYODO

With almost breathless speed, two of Prime Minister Shinzo Abe’s most recent cabinet appointments, trade minister Yuko Obuchi and justice minister Midori Matsushima, resigned after it was revealed they violated political funding laws. Matsushima’s downfall, which revolves around her free distribution of uchiwa (round fans) to voters, may have as much to do with political expediency as with breaking rules, but Obuchi’s use of funds earmarked for public use to purchase gifts and supplement recreational outings for supporters was clearly illegal.

Which isn’t to say it’s not common. As one anonymous veteran of the ruling Liberal Democratic Party — to which Obuchi belongs — told Tokyo Shimbun, the Gunma lawmaker’s problematic actions used to be a fairly normal practice in the Diet. Obuchi is accused of using her political funds, which come from taxpayers in the form of seito kofukin (political party subsidies), revenues from tickets sold for fund-raising get-togethers, and donations from individuals and groups, to supplement “theater tours” for her supporters. Obuchi’s supporters each paid ¥10,000-¥12,000 to go to Meiji-za in Tokyo to enjoy a day of stage performances. However, in her required political funds report there was an obvious discrepancy. Since 2007, the amount received from supporters for these excursions totaled ¥11.9 million, and it is deemed they cost more than ¥60 million to carry out, with the difference being ¥53.3 million that came from Obuchi’s funds.

The veteran says that such jaunts for supporters were normally arranged directly by the politician’s staff, but ever since the law became more thoroughly enforced, lawmakers have entrusted the job to travel agencies so as to divert the trail of money.

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Foreign tourists expected to take up (some of) the slack in consumption

Monday, October 6th, 2014

Everyday low prices: Duty Free store at Narita Airport

Everyday low prices: Duty Free store at Narita Airport

According to a survey of 12,000 tourists in 2013 carried out by the Tokyo Metropolitan Government, the Chinese spend more than any other group, which isn’t surprising. What is surprising is by how much they outspend other nationalities.

On average, a Chinese visitor spends ¥191,741 in Tokyo. The average spent by all foreign tourists in Tokyo is only ¥46,546, which means Chinese spend about three times as much.

After China, the most spent is by Singaporeans (¥135,377), and then Spaniards (¥129,558). Another notable aspect of Chinese spending is that the bulk is not spend on accommodations or dining, but rather on souvenirs, about ¥122,000. The most popular area for Chinese shoppers is Ginza, because that’s where all the luxury brand stores are.

The government wants them to spend even more, and is thus expanding the list of items that foreign tourists can buy without having to pay consumption tax. Previously, consumables like food, liquor and cosmetics were not exempt from CT when bought by foreign tourists at stores in Japan, but since Oct. 1 they are.

CONTINUE READING about new duty-free lists →

Casino tax study exposes pachinko to greater scrutiny

Monday, September 8th, 2014

Where's the money? Pachinko patrons at an off-site exchange booth

Where’s the money? Pachinko patrons at an off-site exchange booth

In line with plans to make casino gambling legal in Japan, the government needs to come up with some sort of scheme to tax gambling receipts, but even before they do that they have to address another problematic potential revenue source: pachinko. As it stands, pachinko winnings are not taxed and pro-casino forces are thinking of implementing a 1 percent levy on those winnings, so they went to the National Police Agency and asked for figures to see what kind of tax revenues they could expect. An NPA representative told them, seemingly with a straight face, that they don’t keep such statistics since there are no winnings.

Classic pachinko is like pinball in that the player earns points by being able to send balls into certain holes, which gives him more balls to play with. In gambling terms, a player wins when he ends up with more balls than what he started with. However, pachinko parlors cannot reimburse the player for the balls he wins. Instead they give him tokushu keihin (special premiums) — ball point pens, lighter flints, etc. — in exchange for balls. Then, he can take those premiums to an off-site, unaffiliated shop that buys them with cash. The shop then sells the premiums back to a wholesaler, which, in turn, redistributes tham back to pachinko parlors.

This “three-shop exchange system” (santen kokan hoshiki) bypasses anti-gambling laws because the venue where the customer plays the game does not offer cash rewards. Everyone understands this system and how it works, but the police representative told the group of lawmakers that they don’t have figures because “we don’t know anything about places” where pachinko players exchange prizes for money.

According to the Asahi Shimbun, the lawmakers were “disgusted” with this ingenuous display of “tatemae” (official principle). The group, established last February, believes a 1 percent tax on pachinko winnings would generate ¥200 billion a year in revenues for the government, which is important since the present administration has decided to reduce the amount of corporate tax it collects and has to make up the shortfall somehow. Consequently, according to the Asahi, these lawmakers have to “destroy” the illusion that people don’t exchange pachinko balls for cash, which means they have to publicize the three-shop system and explain it for what it is, which is gambling by indirection.

The system was devised in Osaka in the 1960s. At the time, players exchanged the premiums they won for cash directly from organized crime members. Later, the police forced underworld elements out of the business and entrusted the exchange system to local chapters of the Japan War-Bereaved Families Association, which consists of people who lost heads-of-household and other loved ones on the front lines in World War II.

It was a form of public welfare, and at this point the NPA acknowledged, albeit tacitly, that pachinko exchanges weren’t strictly illegal any more. Eventually, they set up their own bureaucratic organization, the Pachinko Gyokai Dantai (Pachinko Industry Group), and staffed it with retired NPA officials to administer the exchange system. Some media have said that profits from the system go into the police pension fund and other NPA-related schemes. In any case, the police have never allowed anyone outside this organization to have anything to do with the system.

CONTINUE READING about gambling in Japan →

Prep schools succumbing to more than economic reality

Monday, September 1st, 2014

In recent weeks the yobiko Yoyogi Seminar announced that it would be closing 20 of its 27 schools nationwide by March of next year. The reason is clear and has been for years: enrollment is dropping with no bottom in sight.

Yoyogi Seminar in Tsudanuma, Chiba Prefecture, which is one of the branches scheduled to close

Yoyogi Seminar in Tsudanuma, Chiba Prefecture, one of the branches scheduled to close

The term “yobiko” is sometimes translated as “cram school” and sometimes as “prep school,” and so they tend to be mixed up with juku, another education-related term translated as “cram school.” Practically speaking there is no real difference, since both forms of enterprise prepare students to take entrance tests for higher institutions of learning. But juku tend to be associated with elementary school and junior high school students, while yobiko are more often attended by high school students who want to get into name universities.

Just as often they are used by high school graduates who are doing the same. Since these grads are not attending a for-credit school at the time, they are referred to as ronin, the word that described masterless samurai in the past. And in a sense it is the loss of ronin that made Yoyogi Seminar realize its future was in jeopardy. This past spring, according to the education ministry, 80,000 ronin took college entrance tests. In 1994, the number was 280,000.

The obvious reason for the loss of ronin is that the so-called “narrow gate” for entering universities has widened over the years. As the birthrate continues to remain low the number of available students has dwindled, and at the same time the number of universities has actually increased, from 552 20 years ago to 781 as of the beginning of this year. Schools, especially those lower on the prestige scale, are desperate for paying students and thus have eased requirements for admission. Some don’t even require tests any more, but accept recommendations or school performance records. And without the entrance testing system most yobiko have no reason to exist.

CONTINUE READING about cram schools and ronin →

Local municipalities vie for your ‘hometown tax’

Monday, August 11th, 2014

Screen shot of web portal site for products being offered as gifts in exchange for "hometown tax" donations

Screen shot of web portal site for products being offered as gifts in exchange for “hometown tax” donations

The ruling Liberal Democratic Party is already thinking about next year’s local government elections and in order to help their candidates is studying a possible increase in the maximum tax deduction afforded to people who contribute “hometown taxes” (furusato nozei), a system that was implemented in 2008 to help regional municipalities struggling with budget shortfalls.

Because an increasing portion of the population is concentrated in large metropolitan areas, local government tax bases are eroding. The hometown tax diverts some of the money people pay to big city governments to these smaller municipalities in the form of donations. In order to make the system attractive to taxpayers, the central government offered deductions not only for national income taxes, but also for local income taxes.

Taxpayers can donate funds to a local government that is different from the one where they live, and despite the name of the system it doesn’t have to be their hometown. It can be any locality. Say you live in Tokyo but you want to help out a town in Fukushima devastated in the disaster of 2011, something that many people have used the furusato nozei to do. If you donate 20,000 to that town in Fukushima through the hometown tax system you can get a deduction off your national tax bill this year, and since local income taxes are based on national income taxes, this deduction, as well as a separate deduction for charitable donations, is reflected in your local tax bill the following year, which will be lower that it would have been otherwise as a result. So for the ¥20,000 donation, the taxpayer ends up with an ¥18,000 tax savings (¥20,000 minus a ¥2,000 handling fee).

CONTINUE READING about hometown tax →

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