Archive for the ‘Taxes & Welfare’ Category

For young women sex industry offers safety net the government doesn’t

Wednesday, February 26th, 2014

A sign teases sexual services.

A sign teases sexual services.

One of the pillars of Abenomics is getting more women to join the workforce, but since last fall, when a young woman in Osaka was found in her apartment starved to death, the media has been reporting dire statistics about poverty among women. According to government statistics, one-third of females who are productively employable and living alone make less than ¥1.14 million a year, which demarcates the government’s poverty line.

The peak year of employment in Japan was 1997, when 38.92 million men had jobs and 26.65 million women. In 2012, the number of male workers had dropped to 36 million, while that of females had declined less, to 26.5 million. In 2012, women made up 42.3 percent of the workforce, a three percentage point increase since 1980. However, the stability of that work seems to be going in the opposite direction. The number of non-regular and part-time workers is on the increase, but the number of women in this group is disproportionately larger: 57.5 percent for females to 22.1 percent for males. Without regular employment and the opportunity for periodic pay raises, these women invariably fall into a cycle of poverty from which they can never escape. The situation for single mothers is even worse: 80 percent of those who work fall below the poverty line, even with government assistance factored in.

NHK’s evening in-depth news program, “Closeup Gendai,” has aired a series of reports on poor young women. One program broadcast in late January profiled several. There was a teenage girl working at a convenience store to support her sick mother and three siblings while taking a high school equivalency course that she hopes will lead to a night school program that will earn her a license to teach nursery school, but the program will cost her ¥80,000 a month, which means she’ll have to take out a loan that will be paid back when — and if — she gets a job. There’s a woman from Aomori Prefecture who worked three jobs but still couldn’t make enough to support herself since the minimum wage in the prefecture is only ¥650, so she came to Tokyo, where the minimum wage is higher, but so are living expenses.

Experts interviewed by NHK point out that women have traditionally taken low-paying service jobs because they weren’t expected to stay on, eventually marrying and having children. But now young women don’t have as many marriage prospects due to lower incomes for marriageable men. More of them have to support themselves, but there are only these low-paying service jobs which aren’t enough to live off of. The cycle of poverty is already in gear, because these women’s parents are themselves poor, which is why they no longer live with them. When a reporter asks one woman if she hopes to have children one day, she looks at him as if he were crazy. She can’t even feed herself. How could she feed a child?

But there are women trying to do just that. One 28-year-old single mother in Hiroshima is raising a 2-year-old and a 4-year-old. She makes ¥100,000 a month and receives a child allowance of ¥40,000 from the government. She herself grew up in a poor family and had to start working when she graduated from junior high school.

But according to one program in the series there is an area of hope for such women: the sex industry (fuzokuten). Massage parlors and escort services offer not only dormitories for staff, but also daycare if the workers have young children. Want ads indicating such benefits are common, but the NHK director could only find one company that would agree to coverage. The camera shows the manager of the business talking on the phone, telling a customer that the fee is “¥19,000 for 90 minutes, if you don’t state a preference for a worker.” At this company, 40 percent of the fee goes to the company and the rest is kept by the worker. The manager says they get a lot of applicants, especially from single mothers because of the daycare. Though some businesses run their own daycare, most contract with outside services. The dorm is also a big draw, though the manager points out that “sometimes there are more staff than there are available rooms.”

One of the employees interviewed by NHK says she is 21 and has an 18-month-old daughter. She had to start working right after the girl was born, but there are no daycare facilities that accept infants. She had no choice but to work here, and in six months she has managed to save ¥700,000. She makes ¥300,000 a month. “When I’m 25 I’ll probably have to quit, and my parents don’t know I work here,” she tells the director, but by that time she hopes to have a lot of money saved. Another interviewee is in her 30s, also a single mother. She is here to look for a job. She once worked in the sex industry but quit when she got another job. Then she fell ill and applied for welfare, but was told it would take two months to check her background and than another month to process her application. She can’t wait three months.

During the seven days that NHK covered the business, it hired 15 new employees. Though the information reported on the program is sobering, several Internet commentators have pointed out that these conditions have always been the norm in the sex industry, but it’s only now that people are paying attention because of the economic situation.

 

Image via furibond

Consumption tax rush approaching peak time

Tuesday, February 18th, 2014

Curb your enthusiasm: Don't rush out and buy an aircon to beat the tax hike since it will probably be cheaper afterwards anyway

Curb your enthusiasm: Don’t rush out and buy an aircon to beat the tax hike since it will probably be cheaper afterwards anyway

Retailers continue to enjoy good business in the runup to the consumption tax hike on April 1, but some are a bit anxious that consumers may not understand the situation sufficiently. Tokyo Shimbun visited a few Tokyo department stores where the rush to buy is especially intense, causing them to post clarifying announcements to head off any attendant disappointment.

At Isetan, these notices are posted prominently in the furniture and bedding sections, as well as the eyeglass section, meaning departments where people order merchandise and then take delivery later. As one Isetan employee explained to the paper, the consumption tax is applied on the day of receipt of merchandise, not on the day it was ordered or even on the day it was paid for. A good portion of department store sales are order-made products, and the notices are cautioning customers to make sure they understand the date their stuff will be ready to pick up, otherwise they may end up paying more than they thought they would.

Keio department store is telling all its customers about the rule so that “there is no misunderstanding.” Daimaru Matsuzaka, near Tokyo Station, has seen sales of order-made men’s suits climb to 14.4 percent higher than last year, a new record, but the closer they get to March the more nervous they are since some suits take longer to make than others. Takashimaya in Nihonbashi is apparently the most conscientious department store, posting very detailed explanations in all its sections that insist the earlier you order something, the more likely it will be you can avoid the extra 3 percent charge.

However, a related article in the weekly Aera says that consumers shouldn’t worry that much, since there’s a good chance people will buy something now to avoid the tax hike only to end up paying more. Some retailers are not as straightforward as the above-mentioned department stores, using the rush as a means of getting customers to sign up for credit cards in order to compound their savings without realizing that in the end they’ll probably have to pay handling fees that will negate such savings, unless they happen to be frequent patrons of the store, in which case they probably already have a card. The magazine interviewed a few housewives who plan to make big purchases ahead of the tax hike.

One woman says she is going to buy all new household appliances, while another in her early 30s will buy baby shower and wedding gifts for friends who will celebrate these happy events in the near future, but as she said, “often these gifts go on sale in July, so I don’t know if I’m actually saving money by buying them now.”

A financial planner told Aera that it may be a mistake to buy some big ticket items now. Air conditioner sales, for instance, tend to be their lowest in March, which is between the cold and the hot seasons. That’s also when manufacturers put out new models, which means last year models will be quite cheap, so he advises to wait. Even after April 1, the price could be considerably less than they are now, even taking the tax hike into consideration. But automobiles and home improvement work, he says, should be ordered right now, if it already isn’t too late, because they require time before final delivery and there are no bargain sales associated with either. For mini-cars (kei jidosha), in particular, now is the time to buy since next year the car tax for buying one will increase by 50 percent.

In the end, here are items that Aera recommends buying now to beat the tax: household appliances; over-the-counter drugs that can be stored for long periods, like aspirin; gold, since the purchaser can buy at a lower tax rate and sell at a higher one; theme park tickets; long-term commuting passes and train tickets in bulk (kaisuken).

Items that Aera doesn’t recommend buying now: PCs and TVs, because they always go on sale; apparel and accessories, which tend to be much cheaper during semiannual bargain sales; real estate and stocks; gems and platinum, which, unlike gold, are more vulnerable to price fluctuations; and everyday necessities like toilet paper, which people all over the world tend to buy up whenever there is some sort of financial panic.

Regional bank hits on novel way to attract business

Wednesday, February 12th, 2014

Banner advertising housing loans outside branch of Keiyo Bank in Inzai

Banner advertising housing loans outside branch of Keiyo Bank in Inzai

Lottery winners who hit the jackpot are always good news stories, but the anonymous lucky individual who was the subject of reports in all major media on Feb. 3 represented a different angle on the topic. Instead of being announced by the authorities who administer the Year-end Jumbo Takarakuji lottery, the ¥700 million prize was publicized by a regional financial institution, Chiba Prefecture’s Keiyo Bank. That’s because the winner of the jackpot didn’t actually have the winning ticket in his or her possession. The bank was holding it for safe keeping.

With interests rates on time deposits being so low for so long, banks, especially smaller regional ones, have a tough time convincing people to become customers and usually resort to special premiums or deals. Keiyo’s is to offer lottery tickets as incentives to open savings accounts. For every one million yen deposited in a three-year teiki yokin (time deposit account), the depositor receives five lottery tickets per year for various drawings. Keiyo, however, only supplies the customer with the number of the ticket, not the ticket itself, which it holds on to. When the drawing is carried out the customer checks the number against the winners and if there’s a match the customer contacts the bank, which then gives the customer the ticket for him or her to cash in.

In this most recent case, the drawing was conducted in early January and the bank, knowing that one of its customers had won, waited for the customer to call. The person didn’t.   After a month, the bank finally called the individual with the happy news.

What’s most interesting about the story is that it isn’t the first time a Keiyo customer has hit it big. The bank has been offering the lottery incentive since March 2007, and in the intervening years there have been 34 ¥1 million winners, two ¥5 million winners and one ¥100 million winner. These numbers give the impression that Keiyo customers have a higher probability of winning, but according to a lottery expert interviewed by Tokyo Shimbun it’s difficult to figure the odds since the bank has never released the total number of tickets it has bought for customers over the years, but likely it isn’t that much because Keiyo is, after all, a regional bank with a limited reach.

As a reference, interest on a three-year time deposit is 0.03 percent, which means for the first year of a ¥1 million account the customer earns ¥300. That amount would buy one ¥300 lottery ticket before the government deducts its 20.315 percent tax on interest.

Side note: In December we wrote about the Post Office lottery for New Years cards. In case you still have them lying around and didn’t check the winning numbers here they are: If the last five digits on any of the cards you received are, in order, 9-7-0-8-5 then you win ¥10,000. If the last four digits are 2-3-4-4, you win a prize of some sort of regional product. And if the last two digits are either 7-2 or 7-4, you win a sheet of postage stamps. You have until six months after the Jan. 22 announcement date to claim your prizes.

Deflation Watch: New Year’s scorecard

Sunday, January 12th, 2014

Bottomless: Bargain bulk sale on diapers at discount store

Bottomless: Bargain bulk sale on diapers at discount store

In a chat with Nobel Prize-winning economist and New York Times columnist Paul Krugman, the weekly magazine Aera asked him about the prospects of “Abenomics,” which Krugman has supported. He still supports it, but thinks that the consumption tax hike to 8 percent next April was a “bad decision” that may ruin all the good things that Abenomics could achieve. He recommends that Prime Minister Shinzo Abe either cancel the increase or postpone it.

It’s probably too late for that, which explains Abe’s recent desperate attempts to get Japan’s businesses to promise to boost salaries, none of which seem to be working. In a recent Kyodo News survey of 104 “key” companies, only 17 percent say they plan to increase pay in 2014, but none will carry out basic salary increases across the board, what’s known in Japanese business parlance as “base up.” The feeling is that they’ll increase wages for some workers, maybe through bigger bonuses, but such schemes don’t instill confidence in workers, and unless workers think they will be paid more in the future than they are now, they aren’t going to spend as freely, behavior that’s central to the success of Abenomics.

In the Kyodo survey 71 percent of businesses polled believe they will see growth in 2014, but if that growth isn’t translated into higher salaries, the game is off. Moreover, the good performance of the economy in 2013 was misleading. As web magazine Diamond Online points out, it was a minority of well-to-do Japanese who benefited from the stock market boom in the past year. Also, because people have anticipated the consumption tax hike next year, they rushed to buy houses. These two factors boost numbers, at least temporarily, but they don’t solve the underlying problem of deflation and lack of consumer sentiment in the population at large.

Much was made of the big profits enjoyed by large companies this year, but they represent a fairly small portion of the Japanese business community, only 0.3 percent of all registered companies. They made money through exports, meaning they benefited from the higher dollar. That’s all. Diamond says that 70 percent of the Japanese workforce is employed by small or medium-sized companies, who depend mainly on domestic consumption.

Diamond surveyed 200 workers about their winter bonuses. Seventy-eight said they received no bonus at all, while 98 said their bonus was less than ¥500,000. Only 38 replied that their bonus was larger than last year’s, while 40 said it was less. The remainder said there was no change. This contrasts greatly with the widely reported news that the average winter bonus of an employee of a large company was ¥806,000.

More significantly, when Diamond asked the people who did receive a bonus what they used it for, 61 percent said it went into their savings, while 24 percent said it would go for “necessary expenses” and 19 percent used it to help pay off loans. In other words, only 6 percent, at most, bought something with it.

The Mizuho Research Institute found that the average household, which earns ¥4 million-¥5 million a year, will spend ¥78,869 more in taxes in 2014 thanks to the consumption tax increase. The Cocomane website, which helps consumers save money with tips on reducing expenditures, did its own survey of 1,127 people, 80 percent of whom said they “economize” on a regular basis. Why are they always looking to save money? The number one reason is to “prepare” for future expenditures. The second most common reason was “loss of income,” and the third reason “not enough money saved.” As to the question “How do you save money?” the most frequent answer was the simplest: Just try not to spend it, followed by “not eating out” and “cutting back on utilities.”

But the most interesting responses were in relation to the consumption tax hike. Fifty-four percent of respondents said they have not made nor do they intend to make any “big purchases” before the increase goes into effect, and 62 percent of the people who are making big purchases say it has nothing to do with the increase. Essentially, most consumers either aren’t changing their already careful consumption habits in face of the tax increase, or they will try to spend less. Almost no one expects to spend more.

Government tries to jolt EV sales with charging station subsidies

Wednesday, November 27th, 2013

Newspaper ad promoting installation of recharging stations for EVs

Newspaper ad promoting installation of recharging stations for EVs

Norway boasts the highest per capita ownership of electric cars in the world, for a number of interrelated reasons, it seems. The tax on purchases of new cars, all of which are imported, can be more than 100 percent, depending on weight and fuel efficiency, but it’s almost zero for electric cars. The annual automobile tax is about a seventh of the tax burden for a gas-powered vehicle. This savings is apparently enough to offset the higher sticker price of electric cars. According to a friend of ours who is Norwegian, the American Tesla sells for 580,000 kroner, or ¥9.6 million, and there is a six-month waiting list. We asked our friend if there were enough high-speed charging stations in Norway, and he said there are about 4,000, which is not considered enough but he says most people are “satisfied” with charging their EVs at home, where it takes about 8 hours to top them off.

In addition to offering tax breaks, the government promotes EVs by subsidizing the installation of charging stations. EVs do not have to pay road tolls, and they can use lanes that are normally limited to buses and taxis. More significantly, despite the fact that Norway’s wealth is derived from oil, its gas prices are among the highest in the world, twice as much as they are in Japan. So while EVs are very expensive to buy , in the long run they are much more economical thanks to the government.

One of the reasons auto-related taxes are so high in Norway is that the country has no automotive industry to protect. Electric cars are manufactured in Japan and are relatively cheap, but much less popular. At last week’s Tokyo Motor Show, Carlos Ghosn, the CEO of Nissan, which makes the electric Leaf, admitted that EVs weren’t selling as well as expected and that the company’s sales goal of 1.5 million units by 2016 would not be reached.

According to Sankei Biz, EV sales in Japan have picked up slightly in recent months, and as of October 120,000 electric cars have been sold in Japan since they were introduced. About 87,000 of these were made by Nissan. Ghosn says the main reason the target won’t be met is “lack of infrastructure,” meaning lack of charging stations.

In August, Toyota, Nissan, Honda and Mitsubishi announced that they would jointly build more recharging stations throughout Japan to promote electric vehicle sales, with the help of government subsidies, and last week the four automakers agreed on the details of “specific financial assistance” to parties who install charging stations.

Tokyo Shimbun reports that at present there are 1,900 quick charging stations in Japan and about 3,500 normal charging stations. The government will provide subsidies of up to ¥1.7 million to businesses that install quick recharging stations on their properties and ¥400,000 to businesses that install normal recharging stations. The government’s aim is to increase the number of quick stations by 4,000 and normal stations by 8,000, though no timeline has been given.

These subsidies are being offered through both the central government and local governments. Maintenance of the stations will also be subsidized for a limited time. If the business is a convenience store, it has to have parking for at least ten cars, and if it’s a gas station it has to be open 24 hours. Applications for the subsidy, however, will only be taken until February of next year.

Blood on the tracks: Who pays for deadly railway accidents?

Friday, October 18th, 2013

Don't look now

Don’t look now

One of Japan’s enduring urban legends is that railway companies demand compensation from families of people who commit suicide by throwing themselves in front of trains. Because the media doesn’t report such matters it isn’t easy to verify, but according to the Chunichi Shimbun railways “in principle” send bills to families of people who die in railroad “accidents” if the railroad is not at fault and the accident causes a delay that costs the railway money. The articles don’t say anything specific about suicides, however.

The subject of the piece is a case that was recently decided in Nagoya District Court. JR Tokai sued the family of a 91-year-old man from Obu City, Aichi Prefecture, who was hit by a train and killed while walking along the tracks of the Tokaido line in December 2007. JR Tokai was demanding ¥7.2 million from the family for losses incurred due to delays caused by the accident, which affected 27,000 passengers and 34 trains, forcing the railroad to provide alternate transportation, such as buses, to inconvenienced customers.

In court, JR Tokai’s lawyers said the company sent a bill to the family of the man “as it usually does in such matters,” but the family never responded, so they filed a lawsuit and in the end the judge awarded JR the full amount it asked for. The family will appeal.

At issue was the responsibility of the family in the actions of the old man, who suffered from dementia. Six years ago local welfare officials determined that the man required 24-hour supervision. The family placed him in an institution several days a week, but on the remaining days he was at home with his 85-year-old wife, who can mostly fend for herself. In addition, the man’s eldest son, who lives in Yokohama, set up a care system for his father that included his wife regularly traveling to Obu to help out. On the day the accident happened he was alone with his wife, who dozed off, and he wandered out of the house and to the nearest station where he somehow ended up on the tracks.

Chunichi says there is no precedent for a railway company suing over an accident caused by a person with dementia, and the lawyer for the family said that the case could have serious repercussions for families with elderly members who have serious cognitive disabilities, since it means they could be liable for all sorts of incidents, and not just those involving trains.

In court the family said that JR Tokai should bear some of the responsibility since it didn’t prevent the man from getting on the tracks after he entered the station (presumably without a ticket, which raises another question). JR countered by saying it had “fulfilled all our legal obligations” with regard to track safety, and the judge agreed, adding that it was the responsibility of the family to monitor and supervise the actions of the old man.

But if families are monetarily liable for actions carried out by members who are senile, can they also be liable for members who are suicides? So far there doesn’t seem to be a court precedent for such a situation. It seems to depend on the circumstances, suicide or not.

For instance, recently a 40-year-old woman was killed trying to help an old man who stumbled trying to cross the tracks of the JR Yokohama Line. The old man survived, but there has been no report that JR East is demanding he pay up, maybe because the media reports on the heroism of the woman drowned it out or made the company think twice about possible negative publicity if it made such a demand in this case.

Then again, earlier this week a 47-year-old man was killed while crossing the tracks of the Tobu Tojo Line in Tokyo’s Itabashi Ward. Witnesses say he was walking and absorbed in his cell phone when he was hit and didn’t notice the train, though obviously he had enough presence of mind to go through the gates, which were down. Now that guy’s family will probably receive a bill.

Government wondering how to tap burgeoning ebook market

Saturday, October 12th, 2013

No waiting

No waiting

It’s official. The consumption tax goes up to 8 percent in April, and the government is anxious to plug any loopholes. The most bothersome one is for ebooks. Though domestically sold ebooks, meaning those distributed by Japanese vendors from physical addresses in Japan, are already taxed, those sold from overseas are not, and the tax bureau is wondering how to correct this problem, especially now that the price gap between an ebook purchased from a foreign-based agent and one purchased from a Japan-based seller will widen, thus setting up a disadvantage for the latter. Market research company Daiwa Soken reports that in 2012 the government missed out on ¥24.7 billion worth of tax revenues from the purchase of ebooks from abroad.

Legally, sales transactions that occur outside of Japan are not subject to consumption tax, and the place of the transaction is determined by the address of the seller. So if you go to Amazon.co.jp and look at various books, you’ll notice that those which are sold by Amazon Japan have consumption tax included in the price, while ebooks sold by Amazon Services International do not. What the government wants to do is change the law so that the place of the sales transaction is not the place of sale but rather the place of usage, a tactic that some American local governments have tried with regard to sales tax. But sales taxes are paid at the retail stage, while consumption taxes are incurred at every step of distribution, so a Japanese importer adds the tax after the item arrives in Japan.

If a customer in Japan buys the book directly from overseas, no tax is imposed, but when the law is changed customs could add it because the imposition location is the user’s address, not the seller’s. However, since ebooks, as well as music tracks and software, tend to be purchased over the net it’s more difficult to monitor, if not downright impossible.

According to Tokyo Shimbun, the Finance Ministry’s plan is to strike deals with tax agencies abroad so that the consumption tax is added on when sales are made. Overseas sales companies who do business in Japan would have to register with the Japanese tax bureau. For large-scale companies with widespread presence in Japan and sales units overseas, like Amazon and Rakuten, which in 2011 bought the Canadian ebook seller Kobo, that shouldn’t be a problem, but there are dozens if not hundreds of smaller content vendors who will fall through the cracks.

Already, some Japanese language ebook sellers and other net vendors have set up operations overseas to exploit this loophole, thus causing concern for domestic companies like Yahoo Japan, whose president compared such competition to a boxing match in which Japanese companies “have to fight opponents who are three weight classes above them.” Eight percent can make a big difference, especially since Japanese ebooks tend to be priced high anyway compared to ebooks in other countries.

In that regard, buyers of non-Japanese language books have an even greater advantage in Japan, since Japanese publishers still enjoy government-sanctioned fixed prices for all first-sale books and magazines, regardless of when they were printed. Japanese bookstores cannot set their own prices and industry distribution rules discourage remainders. With the rising popularity of ebooks in the West — 20 percent of all books now sold in the U.S. are electronic as opposed to 8 percent in Japan — print books have actually benefited since people can seek out remainders and used books through Internet sales agents, and usually they purchase them for less money than an ebook, even with shipping included. That’s not the case in Japan, except for used books. But if Japanese ebook sellers set up agencies abroad they can corner the market.

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