Archive for the ‘Taxes & Welfare’ Category

Local governments finally getting around to public toilets

Monday, November 24th, 2014

Get down: Public rest room in a park in northern Chiba Prefecture

Get down: Public rest room in a park in northern Chiba Prefecture

Japan is a country of tradeoffs. Though there is an intentional paucity of public waste receptacles, there are plenty of free public restrooms, something that foreign tourists should note with appreciation. What they may not appreciate is the fact that most of the public facilities still feature squat-type toilets, which is certainly an irony since one of Japan’s most famous gifts to the world is the all-service commode, or “washlet,” which does practically everything but pull your drawers up.

We searched high and low for some kind of survey that revealed the portion of public toilets that are squat-type and couldn’t find any, so our claim that most public toilets, whether they be in parks, train stations or just along a street, feature squat type facilities is mainly due to observation.

But it’s obviously a situation that people are aware of. Chiba Prefecture recently announced that it set aside a supplemental budget in order to subsidize local governments and private entities who need to replace older Japanese style toilets under their management with Western style equipment before 2020, when Tokyo hosts the Olympics and it’s assumed lots of foreign tourists will come to the metropolitan area.

In a survey conducted in 2009, the prefectural tourism division asked visitors what they found “unsatisfactory” about their travels, and 25 percent mentioned “an insufficient number of toilets.” Another problem was that the toilets they did use were not clean enough.

Consequently, the prefecture decided to increase its subsidy to relevant bodies from half the cost of toilet renovation to two-thirds the cost. This money will mainly go toward building new facilities or renovating existing ones that can be used by tourists.

Apparently, these bodies have taken the prefectural government up on their offer and spent about ¥200 million in public funds this fiscal year, which is ¥60 million more than they spent last year. However, this money covered only 22 facilities, and since more organizations are asking for help, the prefecture passed a ¥50 million supplementary budget for toilets in October.

For reference, 86 public restroom facilities located at recreational beaches, public parks and sporting grounds were renovated with the help of public funds over the last 5 years. In most cases the money went to replacing older, squat type toilets with Western or so-called multi-use toilets for the elderly and the disabled.

An example pointed out in an article in the Yomiuri Shimbun was a public restroom in the fishing port of Tateyama. The facility was renovated in 2013 and the port received ¥800,000 from the prefecture toward the work, which involved installing Western toilets. However, the local official in charge of the project said they tried to retain the special local character of the restroom. We’re not sure what that means, but apparently it had something to do with the designs on the walls.

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.

Obviously, this sounds more like something the education ministry should tackle, and, predictably, the education ministry objects to the recommendation, saying that increasing class number back to 40 runs counter to world trends, which favor smaller class sizes so that students can get more individual attention from teachers.

The finance ministry has countered the objection by saying that the money saved by increasing class size can be spent on “pre-schoolers,” since the education ministry is now promoting tuition-free pre-schools for some households but have no budget for it.

As several other media have pointed out, the finance ministry isn’t really interested in education programs. It is simply moving the money from one area to another. It’s a matter of bookkeeping.

The ministry’s justification for cutting teachers is also problematic. It says that Japanese public school teachers’ salaries are higher than they are in other countries, which is a conveniently misleading truth. The salary of a median age 45-year-old full-time public school teacher in Japan is about ¥7 million, though a 2010 OECD survey found that Japanese teachers made on average the equivalent of $44,337 a year, which is $7,000 more than the OECD average. That’s probably what the finance ministry is talking about.

What the ministry doesn’t mention is that this average salary was 8.6 percent less than it was in 2000, which is perhaps a reflection of the fact that more teachers are now non-regular part-timers. Moreover, as a percentage of total public spending on education, teachers’ pay in Japan is higher than it is in other developed countries — 86 percent compared to 81 percent in the U.S. and 67 percent in the U.K. — and as a portion of GDP Japan’s spending on education is the lowest of the 31 OECD countries, and has been for five years running.

But the most significant statistic is work load. The average number of hours worked by a teacher in OECD countries is 39 a week, 20 of which are spent actually teaching. In Japan it’s 52 and 19, respectively. Also, unlike in the U.S., where teachers can get two months off due to summer vacation, Japanese teachers have no time off other than mandatory paid vacation, which means when school is out they are required to show up for work. And Japanese public school teachers do not get paid overtime.

Consequently, the finance ministry’s various justifications for increasing class size seems disingenuous, but they will probably play well with local governments, which pay two-thirds of education costs and stand to save more if class sizes are increased. However, it should be noted that in the larger scheme of things, class size reduction was never much of a policy.

The DPJ wanted to reduce class sizes for all grades of elementary and junior high school, but it became fiscally and politically unfeasible, and so they limited the decrease to only Grade 1, with the hope that later they could extend it to upper grades. But then the Liberal Democratic Party regained power.

As the Asahi Shimbun pointed out in an editorial, the policy has only been in place for three years, so it’s too early to judge its effects, either on bullying or on the quality of education in general. Since enrollment is dropping, the number of teachers will also naturally drop due to attrition. Basically, the finance ministry wants to cut expenditures and sees education as the easiest way to do it by resorting to “bureaucratic hocus-pocus,” as one part-time teacher put it in a letter to Tokyo Shimbun.

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.

CONTINUE READING about higher consumption tax →

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.

CONTINUE READING about political gifts →

How employer transportation allowances helped create commuter hell

Tuesday, October 14th, 2014

Rush hour at Yurakucho Station

Rush hour at Yurakucho Station. By nesnad [CC-BY-3.0], via Wikimedia Commons

According to the Ministry of Health, Labor and Welfare, about 86 percent of Japanese companies pay their employees’ tsukin teate, or “commuting allowance.” To many Japanese the high rate will probably be less surprising than the fact that not all companies pay it. It’s a common misconception that the allowance is somehow a legal mandate, but it isn’t.

Employers don’t have to pay their workers’ transportation expenses, but most do. In fact, as the so-called lifetime employment system that was so central to Japan’s postwar economic growth has slowly been abandoned over the past two decades, more companies have opted to either cut back on transportation allowances by limiting the amounts, or eliminating them altogether. The above figure is for regular full-time employees, and the growing trend among employers now is to hire non-regular employees, either as temps or contract workers.

But while transportation expenses are not legally mandated, they are regulated. Companies can write them off as business expenses, but only up to ¥100,000 a month per employee. If an employee’s commuting costs exceed ¥100,000 in a month, the excess is subject to tax as if it were income.

That’s a lot of money to spend on commuting, even in Japan, and, for sure, the vast majority don’t spend that much. But inadvertently or not, the tsukin teate system has contributed directly to the concentration of businesses in major cities, thus exacerbating the problem of long commutes and over-crowded public transportation.

CONTINUE READING about commuting allowances →

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 →

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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