Japanese Prime Minister Yukio Hatoyama has attended the first meeting of the government's new Tax Commission, which replaces the party-dominated dual tax panel system of the former Liberal Democrat Party (LDP) government.
"I call on you to discuss, with utmost sincerity and in the interest of the people, a tax system to be developed for the future of this country, and reach a consensus," Hatoyama declared during his address to the tax panel's inaugural meeting on October 8.
The Tax Commission has been established to explore a range of tax reform proposals, and Hatoyama has indicated that one of its earliest decisions will be to consider tax exemptions and cash payouts for low-income households, which could be put in place from next April. The abolition of tax charges on cars and a reduction in fuel tax could be another outcome of the Commission's deliberations in the months ahead, the Prime Minister has said. In addition, panel members are set to explore exemptions for companies within the corporation tax system.
Headed by Finance Minister Hirohisa Fujii, the Commission will include other senior members of the Democratic Party of Japan (DPJ), as well as top-ranking civil servants from the Internal Affairs and Communications Ministry. The tax panel replaces the two tax reform panels established under the previous government, one of which consisted of a small group of LDP party members and the other a more independent government body led by an academic. However, this system did not seem to establish a clear vision for the future of the Japanese tax system as the country grappled with the problem of a growing social security burden, and the party tax panel frequently overruled or ignored the proposals of the government tax panel. The DPJ promises that the new tax panel will be much more transparent and open to public scrutiny.
The new DPJ administration, which formally took power on September 16, ending a long period of domination by the LDP, has moved swiftly to shore up the government's finances by announcing that it will cut "wasteful" parts of the stimulus package launched by former Prime Minister Taro Aso earlier this year.
Among other pledges, the DPJ has proposed to cut sales tax on cars, abolish road tolls, give tax breaks to people buying homes in cash, and cut the corporation tax burden of small to medium-sized businesses.
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