Yen for Living

Edit!: Guideline for widow exemption from English language Income Tax Guide for 2009

Last fall a single mother living in Osaka started a petition to get the city government to reduce the fees she paid for daycare. Her argument is based on the widow’s exemption (kafu kojo), which is granted to certain people on their income tax returns. Though many single parents qualify for the exemption, this woman does not. The exemption only applies to women whose husbands are dead (or missing) or who are divorced, regardless of whether or not they have children.

According to an article in Tokyo Shimbun, the petitioner was engaged to get married, but during her fifth month of pregnancy her fiancee got cold feet and left her. It was too late to get an abortion, so she quit her job in Tokyo and moved back to her parents’ home in Osaka. Three months after giving birth she started working part-time, and later secured full-time regular employment. Consequently, her income increased, and thus she had to pay more for daycare since the center where her child was enrolled determines fees based on income.

In Japan “income” (shotoku) is considered to be the amount of money on one’s tax return after all exemptions and deductible expenses are subtracted. Because this woman is not a widow or a divorcee, but rather a single mother who has never been married, she doesn’t qualify for the exemption, which is either ¥350,000 or ¥270,000, depending on circumstances. And since she can’t take the exemption, her income is higher, and thus she pays more for daycare.

The Japan Federation of Bar Associations agrees with the woman, but actually goes further by saying that the law itself is unfair since it discriminates against certain types of single parents. As the name of the exemption attests, it was not originally enacted for the benefit of single mothers but rather for widows. The law went into effect in 1951 to help thousands of women whose husbands were killed in the war. Since then the law has been revised several times. It was expanded to include divorced women with children, and then divorced women without children (but who weren’t getting alimony).

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Getting paid: A patron exchanges prizes for cash outside a pachinko parlor

Pachinko isn’t the huge money maker it used to be. At around the turn of the century, it was a ¥30 trillion a year business, putting it on the same revenue level as medical care, but according to the Nihon Yugi Kanren Jigyo Kyokai, the pachinko industry association, pachinko parlors now pull in about ¥10 trillion less, give or take a few trillion. Ten years ago there were about 17,000 parlors nationwide. Now there’s only about 12,500.

Unlike horses and certain other racing sports, pachinko is not approved by the government for gambling purposes, but the industry has traditionally gotten around this obstacle by offering prizes to winners. These prizes can then be exchanged for cash at secretive little booths (keihin kokan-jo) located outside the premises, since having the booths inside the parlors themselves would be against the law. The businesses that run the booths sells the prizes to a wholesaler who then redistributes them back to pachinko parlors.

Organized crime elements used to be centrally involved in this buy-back cycle, but in the early ’90s the police managed to lock them out of it and set up their own organizations to administer the business. It’s been reported in the past that a portion of the money these schemes make go to the National Police Agency for things like pension funds. A prepaid card system for pachinko parlors was introduced in the ’90s that made it easier for the police and tax authorities to monitor revenues.

Continue reading about keihin kokan-jo →

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