Posts Tagged ‘local taxes’

Golf courses adjust to harsher economics and changing demographics

Monday, July 22nd, 2013

A fairway of your own

A fairway of your own

Of all the cultural phenomena that marked the bubble era of 1980s Japan, none was more economically significant than the rise of golf. Despite its relatively small land area, Japan boasts the third largest number of golf courses in the world — 2,442 as of 2008, which accounts for 7 percent of the earth’s total (the U.S., number one, has 50 percent, with the U.K. a distant second with 8 percent).

The majority of these courses were built before 1990, when land prices were at their highest. However, what really demonstrated the profligacy of the time wasn’t so much the insane number of courses in a country where 70 percent of the land is mountainous, but the practice of investing in golf memberships. The “bubble,” of course, refers to the artificially high valuation of real estate and securities during this time, a situation that extended to almost anything that attracted investment, including golf memberships, which could be brokered as if they were stocks or bonds. Many people who had no interest at all in golf as a pastime bought golf club memberships simply as an investment.

As with all investments made during a bubble period, people who bought them got burned. According to the Kanto Golf Membership Trading Industry Association, the average price of a golf club membership in the seven prefectures that make up the greater metropolitan area in and around Tokyo rose from ¥5 million in 1980 to almost ¥50 million in 1990 and then dropped to ¥2.5 million in 2003. The price spiked briefly in 2006 at ¥5 million before plummeting to ¥1.45 in early 2012. However, it has risen slightly since then and is now around ¥1.8 million.

Continue reading about the dropping prices golf memberships →

Ruling party ends up back where it started with assistance for families

Friday, April 27th, 2012

We’re almost a month into the new fiscal year so it’s high time to review any changes in the cost of living for the average person in Japan. Not counting consumer spending, for the most part the change is negligible. Premiums for national health insurance have gone up for those who belong to the kyokai kenpo system, meaning mainly employees of small and medium-sized companies, from 9.5 percent to 10 percent of salary amount, which works out, on average, to an extra ¥780 a month. The long-term nursing care insurance payments (kaigo hokenryo) for persons aged 40 to 64, whether employed or not, have increased from ¥4,516 to ¥4,697 a month. Reflecting deflationary trends, payouts of basic pension have been reduced by 0.3 percent, but premiums have gone down from ¥15,020 a month to ¥14,980. Unemployment insurance has also been cut from 1.2 percent to 1 percent of salary amount. Utilities are going up. Electric bills will increase from ¥17 to ¥42 a month for an average family, and gas bills will increase from ¥8 to ¥11 a month.

Surprise! Local tax bill for Arakawa Ward, Tokyo, first quarter fiscal 2011

These changes won’t have a major effect on the average household. But one change that may is the shift in tax rules related to the child allowance (jido teate), which was one of the central proposals of the Democratic Party of Japan’s manifesto when it became the ruling party. The DPJ won on the assumption it would pay out ¥26,000 a month per child. By the time the opposition parties got through tearing the proposal apart, the amount had been cut in half, but that payout only lasted a year.

Starting in April, the allowance, which used to be called kodomo teate — the change to jido was supposedly implemented to placate the Komeito Party, who originally came up with the idea years ago under that name — will pay ¥15,000 a month for a child under 3 years old; ¥10,000 a month for the first two children in a family from the age of 3 until they graduate from elementary school; ¥15,000 a month for each child after the second one in the same age group; and ¥10,000 a month for each child in junior high school.

However, in order to get the opposition to accept even this reduced child allowance system, the DPJ had to abolish the dependent child tax deduction starting with tax returns for fiscal 2011, which were just filed this spring. In effect, it means that parents can no longer claim children up to high school, meaning less than 16 years of age, for a tax deduction since they are eligible for the child allowance. High school age children are not eligible for the child allowance so they can still be used as a tax deduction, but the amount of the deduction has been reduced from ¥630,000 to ¥380,000, because the government has now made high school free for everyone, including students who attend private institutions.

Where this change will be felt most immediately is on the local tax (juminzei) bills everyone receives in June. Local tax is calculated based on the national tax returns filed by the middle of March, so because these dependent child deductions no longer apply, individual households’ taxable incomes will increase, meaning the households will see an attendant increase in their local tax bills. Of course, it also means higher taxes on the national level, too, but since these changes weren’t implemented until last fall and salaried workers’ taxes are calculated by the bookkeeping departments of the companies/organizations they work for, they probably didn’t notice the slight monthly increase in their pay statements. They will certainly notice it on the local tax bills, since it shows the amount for the entire year. (It also affects the premiums paid for national health insurance since premiums are based on the previous year’s taxable income.)

So what does this mean in yen terms for the average family? According to the Ministry of Health, Labor and Welfare, taking into consideration both the child allowance payments and the boost in tax liabilities caused by the loss of the child deduction, an average family consisting of one breadwinner earning ¥3 million a year, one full-time homemaker and one child will end up with ¥667 more per month than they had before the DPJ came to power. The same family making ¥5 million a year will end up with ¥375 less per month. If income is between ¥8 and ¥10 million, the average loss is ¥4,083, and if it’s over ¥15 million it’s an average deficit of ¥8,200 a month. To put it another way, according to Sankei Shimbun, the average family making more than ¥4.88 million a year will, on balance, pay more than they did before the DPJ was elected. It’s as good an illustration as any of where politics gets you.

Local governments crack down on health insurance scofflaws

Sunday, September 11th, 2011

Enough to make you sick: monthly Kokuho payment schedule

According to an article in the Aug. 29 Asahi Shimbun, the number of asset seizures initiated by local governments in an attempt to recoup delinquent national health insurance payments has increased startlingly in the past four years. Asahi asked the pertinent sections of all 23 wards in Tokyo, as well as those in 19 major cities about seizures. They received responses from 37 local governments in all, and the data indicates that between fiscal 2006 and fiscal 2010, the number of delinquent payments that led to actual seizures of assets increased by almost sixfold.

In this case, we’re talking about Kokumin Kenko Hoken, or National Health Insurance, which is paid by anyone who is not a member of the Shakai Kenko Hoken system, which is paid for by contributions from employers. Traditionally, National Health Insurance, known as Kokuho for short, was carried by people who are self-employed. And that’s still true. However, the ranks of Kokuho carriers has increased greatly over the past two decades as the employment situation has changed. With more people out of work and even more changing over from so-called lifetime employment to so-called non-regular employment, the number of people who are compelled to pay into the Kokuho system gets larger and larger. Kokuho is administered by local governments, and national insurance, whether paid for by the individual or by his/her employer, is mandatory in Japan. If the individual is too poor to pay the premiums, he or she should go to the local government office and tell an official. The only real way to get out of the system and still have insurance is to qualify for welfare. Other than that, in principle everyone has to pay. Some local governments have a system wherein someone who has not paid because of financial difficulties but needs medical care can pay the full amount of that care up front and receive at least partial reimbursement later, but those are exceptional cases.

Continue reading about health-insurance crackdowns →

Local governments try to make it a little easier for you to pay them

Wednesday, May 5th, 2010

This offer good only until June 30

This offer good only until June 30

If you’re not a full-time regular company employee or a civil servant or a pensioner, then this month you will receive a notice from your local government informing you of how much local taxes (shiminzei, tominzei, kuminzei, kenminzei, etc.) you owe them. If you are a full-time regular company employee or a civil servant or a pensioner, then your local taxes, calculated from how much income you made last year, is divided by 12 and subtracted from your monthly pay for the next year. This fact of Japanese civic life often comes as a shock to new company workers, who don’t pay any local tax their first year and then suddenly get socked with these taxes starting the second year of employment. Also, when full-time workers quit their companies they usually receive a notice in the mail telling them to immediately pay their local tax.

I can’t find any statistics for how many of these people do pay immediately, but in the case of foreign workers, who may be going back to their home countries, I’ve heard local governments lose a lot of money because it’s impossible to follow up on foreign scofflaws, unless they decide to return at a later date, at which point they may be waiting for them.

In some cases local taxes amount to more than income taxes. The lowest income tax bracket is 5 percent, but the average local tax is 10 percent (usually 4 percent prefectural plus 6 percent city, town, village or ward). I am self-employed and what with business expenses I usually pay at least twice as much local tax as I pay income tax, which means the notice that arrives in May can be quite a downer, especially since it comes at around the same time that the bill for my next year’s national health insurance — also calculated based on my income tax return — arrives as well.

In almost all cases, employers take care of the paperwork for their full-time employees, but everyone else has to do it themselves, which is why local governments tend toward a carrot-and-stick approach to make sure people pay. In the past, some local governments reportedly offered a slight discount if you paid everything right away.

However, many people don’t save enough money during the year to be able to pay all at once, so they take the option of paying in four installments: June, August, October and January. Since convenience stores don’t accept local tax payments, you have three options: pay at the post office, pay at a bank or pay at your local government office. All those places are only open during normal business hours, which means working people have to take time off to do it. So more and more local governments are encouraging people to set up automatic withdrawals from their bank accounts. Such a system not only is more convenient for the person, but also guarantees that the local government gets paid, as long as there’s enough money in the account when the withdrawal is scheduled. My local government, which happens to be Arakawa Ward, even offers an incentive: hijiki seaweed, nori (laver), rice or dried fish seasoning to 300 people who sign up for automatic withdrawals and are chosen at random.

RSS

Recent posts