Posts Tagged ‘tax’

Tax auditors running out of cheaters, ponder purpose in life

Friday, October 12th, 2012

Pandora’s box

You know that the recession is getting serious when even the National Tax Agency is reduced to twiddling its thumbs. The amount of unclaimed income that tax investigators discovered last year was ¥19.2 billion, comprising a measly 189 cases, the lowest since 1978. Moreover, of all the cases they investigated, only 61.9 percent were prosecuted, the lowest rate since 1973.

It should be noted that these numbers actually apply to tax returns or lack of reporting that occurred in 2008, since it takes about three years for the agency to complete an investigation before deciding on whether to pursue prosecution. So these numbers could simply be a temporary dip owing to the fact that 2008 was the year of the Lehman Brothers failure that jump started the whole economic crisis. However, there are other factors at play.

A tax agency official recently told Tokyo Shimbun that “prosecutors’ attitudes” changed after several recent scandals in which the legality of their methods were questioned, in particular that case in Osaka where a prosecutor cooked up evidence to nail a health ministry bureaucrat. Consequently, prosecutors are a bit gunshy about borderline cases that they would have pursued more aggressively in the past. In addition, over the years tax evaders have become more skillful at hiding income thanks to advances in information technology and the globalization of finances.

But a former tax official told Tokyo Shimbun that he thinks the quality of the auditing has also gone down. When he was an investigator, new recruits were trained under the strictest, most punishing circumstances. Veteran auditors put the screws to their underlings to make sure they were tough and relentless in getting as much evidence against tax scofflaws as they could.

Continue reading about a change in tax audits →

Buy now to beat the consumption tax increase … or don’t

Wednesday, September 5th, 2012

Diagram of new Tokyo condo with flowers marking the units that have been sold

Lookin’ rosy: Diagram of new Tokyo condo with flowers marking the units that have been sold

The term kakekomi kounyu means rushing to buy something at the last minute after hesitating for a long time. The implication is that there is some time limit involved. It’s being used a lot now in the media with reference to the consumption tax, which is scheduled to rise from 5 to 8 percent in April 2014, and then again to 10 percent in October 2015. It’s assumed that many consumers will try to buy big-ticket items before the increase goes into effect in order to save money, and that a good portion will wait until the last minute.

Some economists are advising people to not wait too long, especially if they’re thinking about buying a new home. Recent articles in both the Asahi Shimbun and the weekly magazine Shukan Post say pretty much the same thing on the subject: If you’re thinking about buying a home or a car, you should start planning right now. The Asahi uses the example of a ¥30 million condominium. You can figure that about a third of this is the price of the land, and since land sales are exempt from consumption tax it means you’ll pay tax on ¥20 million.

At present, the tax will come to ¥1 million, but after April 2014 it will go up to ¥1.6 million, and then 18 months later to ¥2 million. If you want to take advantage of this savings, experts say you should move now, because the tax is levied not when you sign the contract for the new home, but when occupancy of the property is “transferred over” (hikiwatashi) into your name, and in most cases the average time between the point when a particular unit goes on sale and the point when the buyer takes possession of it is one year.

So if you want to beat the consumption tax raise you have to start looking now. That’s why so many real estate flyers for new homes stress that “now is the chance.” They really do mean “now,” as in “today.” Moreover, realtors and developers are saying that since there will be a rush to beat the tax, demand will be high and so the longer you wait the less likely it will be that you can find what you want. Prices may even be higher the closer you get to April 2014.

Continue reading about making big purchases before the tax hike →

Wag the dog: Pooch tax more than just a source of revenue

Wednesday, July 25th, 2012

You talkin’ to me?: Sign asking apartment residents to clean up after their dogs

Like a lot of Japanese cities, Izumisano, in Osaka Prefecture, has a problem with dog doo. People aren’t properly cleaning up after their pets, and last year the city government passed an ordinance that would levy an immediate ¥1,000 fine on people who didn’t. The ordinance has gone into effect but there’s one problem: No staff to patrol and issue the summonses. So far not one fine has been levied much less collected. Obviously, the city needs to hire people to carry out the patrols, but like almost every other municipality in the country, Izumisano is short of funds, so the mayor proposed a tax on dog owners to pay for the patrol. The idea was met with overwhelming support from the citizens.

No one bothered to break this support down into people who own dogs and those who don’t, but according to the magazine Aera, these days almost any tax proposal is met with automatic opposition, even from those it doesn’t target. But everybody in Izuminosano thinks this tax is a good idea, including animal welfare groups, which would conceivably shoulder an extra financial burden if the tax is carried out unless it specifically excluded organizations such as private shelters. One such group told Aera that it’s important to enlighten people to the responsibility attendant on dog ownership, especially with regard to a dog’s impact on the environment and public sanitation. The group thinks that a dog tax would be a good way to raise such awareness, in addition to collecting money that can be used for animal welfare.

Continue reading about a proposed tax on dogs →

Politicians’ pay: Even more than you think

Tuesday, December 13th, 2011

Hirohisa Fujii, head of the Democratic Party of Japan's tax panel, listens to recent panel deliberations about a proposed tax hike to pay for reconstruction. (Kyodo photo)

In October we talked about how national assembly members’ pay was going back to normal after six months of pay cuts in the wake of the March disaster. At the same time, the administration of Prime Minister Yoshihiko Noda failed in its attempt to cut civil servant pay by 7.8 percent because Rengo, the union federation that represents government workers, demanded reinstatement of collective bargaining rights as a concession, which the opposition Liberal Democratic Party wouldn’t go for, so the measure was defeated in the Diet. Because Noda’s ruling Democratic Party of Japan was pushing for the 7.8 percent cut it postponed the voluntary 0.23 percent cut proposed by the National Personnel Authority, so in the end bureaucrats are getting paid the same amount they’ve always been paid. Actually, they’re getting even more since last week they received bonuses that on average are 4.1 percent higher than they were last year.

The government pay situation is a huge PR problem for the administration, since it’s about to ask the public to accept a tax increase to pay for reconstruction. To put things in the proper perspective, the basic monthly salary for a Diet member is ¥1,294,000 and his/her yearly bonus amounts to ¥5,530,000. According to the national tax agency, the average salaryman working for a private company in Japan earned ¥295,000 a month in 2010, and received yearly bonuses of ¥580,000. So on an annual basis, a national politician receives more than ¥21 million and a salaryman a little more than ¥4 million.

But there’s more. Each lawmaker is allowed ¥1 million a month for tsushin kotsu taizai-hi (communications, transportation and lodging expenses). This allowance is supposed to be spent on anything having to do with sending documents to or communicating with constituents on matters of a “public nature,” which basically describes anything a politician does. However, lawmakers are not required to submit receipts showing how they spent this money, so that’s an extra ¥12 million a year, tax-free.

Continue reading about politicians' pay →

All in the family: Keeping inheritances is a tricky business

Tuesday, August 23rd, 2011

A recent story reported by all the major media highlights a peculiar aspect of current household economics in Japan. In March, a home in Fukuoka City was broken into and ¥160 million in cash was stolen. One of the people who lived there, a 26-year-old woman, reported the robbery to the police, who have yet to catch the thief.

Wills are almost unheard of in Japan, which may be the problem

During their investigation the police wondered why the woman had such a huge amount of cash in her home. The usual reason is that there is almost no place to park that money these days. With bank interest rates remaining at zero indefinitely, more and more families just sock their money away in the mattress (or, in the Japanese idiom, the wardrobe). Mutual funds and other investment opportunities are available in Japan, but the average Japanese person tends to be averse to anything with risk attached.

In the case of the burgled party, the reasons were a little different. Investigators eventually learned that the ¥160 million was part of a ¥1.45 billion inheritance that the woman and her two older siblings received from their mother, who died in 2008 at the age of 64. The inheritance was made up of both cash and assets, including real estate, and had they properly reported it the three would have been liable for ¥544 million in inheritance taxes. As it stands now they will have to pay more, what with fines and penalties added on. In their case it’s even worse since they may be paying tax on ¥160 million they no longer have.

Continue reading about wills in Japan →

This tax’s for you

Friday, October 16th, 2009

So many beer-like beverages, so little time

So many beer-like beverages, so little time

Last week, Prime Minister Yukio Hatoyama ordered the tax ministry to review the alcohol tax system, specifically in relation to beer and so-called beer-like beverages. The announcement immediately sent the major breweries into a tizzy, since the likely outcome of such a review will be a higher tax for “Number 3-type” (daisan) beverages, which are responsible for most of the profits that alcohol manufacturers have enjoyed in the past year or so.

Though Hatoyama’s Democratic Party of Japan’s manifesto didn’t mention beer, the party’s policy, according to the Asahi Shimbun, is to look at the possibility of pegging the beer tax to a beverage’s alcohol level, which is the way liquor taxes tend to be determined overseas. At present, daisan beverages and happoshu are taxed at much lower rates than beer, even though the alcohol levels of all three are comparable. If the DPJ does peg tax rates to alcohol levels, then the prices of all three beverages will likely become the same or close to the same; a situation that would essentially render daisan and happoshu meaningless, since the only reason they sell so well is that they’re much cheaper than beer. A 350-ml can of daisan, for example, is on average about ¥80 yen cheaper than an equivalent-sized can of beer.

Continue reading about alcohol tax →

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