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  • The 25-year “Special Reconstruction Tax” of Jan 1, 2013 — yet another GOJ leech on the Japan workers’ payroll?

    Posted by arudou debito on February 17th, 2013

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    Hi Blog.  A couple of weeks ago I received this:

    ///////////////////////////////////////

    January 30, 2013
    Dear writers,
    Thank you very much for contributing your articles to The Japan Times.
    We would like to inform you that the special reconstruction income tax, introduced by the government to secure financial resources for reconstruction after the Great East Japan Earthquake of March 2011, took effect on January 1, 2013. This tax is imposed on individuals and corporations – both Japanese and foreign – at a rate of 2.1 percent over a 25-year period through 2037.

    As a result, the total withholding tax rate deducted from the manuscript fee will rise from 10 percent to 10.21 percent for residents in Japan, and from 20 percent to 20.42 percent for overseas residents, starting with the February payment for articles carried in The Japan Times in January.
    Thank you for your understanding and cooperation.
    Sincerely,
    The Japan Times

    ///////////////////////////////////////

    This post is not to criticize The Japan Times (who clearly have no control over this circumstance whatsoever).  But have others also received word of yet another tax on income to go towards “reconstruction”?

    We’ve already seen where money earmarked for “disaster relief” has been going — to fund corrupt bureaucratic practices within the GOJ (e.g., “road building in distant Okinawa; prison vocational training in other parts of Japan; subsidies for a contact lens factory in central Japan; renovations of government offices in Tokyo; aircraft and fighter pilot training, research and production of rare earths minerals, a semiconductor research project and even funding to support whaling“).  I’ve also heard of pay cut after pay cut in the academic communities for “reconstruction”, with little to no accountability over the funds afterwards (one case I’ve heard of is where the gakuchou of a major national university has been sequestering monies into an account to earn interest for his own purposes).

    What say other readers of Debito.org?  We’ve already discussed extensively how the Post-Fukushima Debacles have laid bare just how irredeemably broken Japan’s system is (see related articles herehere (item #2), hereherehereherehereherehere, and here).  Are you also seeing more skimming, both GOJ and non-GOJ related, from your paychecks for “reconstruction”?  Just how bad do things have to get before people say “enough”?  Arudou Debito

    29 Responses to “The 25-year “Special Reconstruction Tax” of Jan 1, 2013 — yet another GOJ leech on the Japan workers’ payroll?”

    1. Markus Says:

      ‘Just how bad do things have to get before people say “enough”?’

      I have read somewhere, and it struck me as well observed, that most other countries where the elite acted like the Japanese one would have long seen as bloody revolution. The Japanese have been taking it lying down since the beginning of records, to a point where they have developed a misguided pride about their suffering. They’d rather commit suicide than speak up – that’s how powerful ultranationalism is, which I have found to be the most widespread motivator behind this illogical behaviour. Look at the living conditions the Japanese accepted so their nation would be more powerful in the war. If it wasn’t so creepy, it would almost be admirable.

    2. trustbutverify Says:

      It’s also interesting that it is not a 2.1% tax on income (which one might infer from the wording) but a 2.1% uplift to the tax rate in effect: 2.1% levied on the tax liability — so it’s essentially a tax on tax. Hm.

      Surprised, actually, that more people (my employer, for example) are not talking about it. I was blissfully unaware until this post, so thanks for that.

    3. Bruno Says:

      I am still trying to understand how Japan can have approved an overtly generous budget for the military, yet has trouble rebuilding Tohoku and has to increase income tax. Maybe I’m just that dumb, but somehow for me this all seems a bit odd.

      @Markus #1

      Suffering is commendable in Japan. You can’t enjoy life, you are suppose to suffer and be happy about it. A kind of “we’re all in this together” mentality, if you may.
      People take it because “everybody does it. Are you not Japanese? You HAVE to do it”. And since speaking up is a no-no, your options are basically either taking it or committing suicide.

    4. James Annan Says:

      Well, we(*) are all enjoying a pay cut of 5-10%, depending on salary. This is for 2 years, supposedly to pay for reconstruction but given the JGov’s propensity to print money, it’s pretty clearly just a hair-shirt-and-ashes “we’re all in it together” publicity stunt. I shudder to think at the impact on the economy of such an abrupt and substantial loss of spending power across such a large part of the economy.

      * “we” here being basically anyone deemed to be quasi-governmental, our research institute is supposed to be independent, but not so much in practice…

    5. Bayfield Says:

      #3 says
      “People take it because “everybody does it. Are you not Japanese? You HAVE to do it”. And since speaking up is a no-no, your options are basically either taking it or committing suicide.”

      Extreme “gaman” and “gambatte” is not for everyone and unfortunately has its costs. Japan’s “fighting-spirit” does look almost “admirable” from an outside point of view. But the method its being used is yielding more negative results than of positive results.

      http://www.tokyotimes.com/2012/suicide-in-japan-exceeds-30000-for-14th-year/

      “in the wake of the tumultuous March 11 earthquake and tsunami, statistics showed that areas badly hit by the catastrophe had suicide rates soaring last year. In Miyagi Prefecture in particular, the suicide rate rose to 39%.”

      “Common factors contributing to Japanese claiming their own lives are unemployment, depression and social pressures.”

      Yet the GOJ/NHK wants everyone to know “everything is fine”.
      http://www.japantoday.com/category/national/view/no-ill-health-effects-seen-in-residents-near-fukushima-plant-yet-researcher

      Then proceed to ramp up xenophobia:
      http://www.japantoday.com/category/politics/view/abe-to-meet-obama-in-washington-on-feb-22

      “Prime Minister Shinzo Abe will hold talks with U.S. President Barack Obama in Washington on Feb 22, with North Korea high on the agenda.”

      I think the economy, the well being of the commoners and Fukushima should be “high on agenda” but that is not the case with the LDP.

      #3
      “I am still trying to understand how Japan can have approved an overtly generous budget for the military”

      I am guessing that the anti-NJ propaganda that is going on in Japan is what keeps Japan from any sort of social or economic “revolution” by the common people so to speak. The public is probably even taught that their suffering is “unique” in an attempt to curtail questions from the curious.

      #1
      “I have read somewhere, and it struck me as well observed, that most other countries where the elite acted like the Japanese one would have long seen as bloody revolution.”

      Perhaps that by the LDP/NHK making xenophobia high on the agenda, it will make people think that the government is there for the people. As of current it seems that the NHK is having a field day with the disputes regarding Senkakus, Dokdo, and a region of Hokkaido by making the LDP out to be some kind of heroes that are “taking back beautiful Japan” as abe would put it.

      Hard for the commoner to be convinced or motivated to resist the ruling elites when you are constantly told that “the government is doing its part to protect you from the evil NJ, you should gaman and do your part too!!!”. Not to mention that the commoners are taught from childhood that the “outside world” is a dangerous place.

    6. Anonymous Coward Says:

      First time commenter.

      I moved to Japan last year, and in general I find taxes here rather low especially income tax. This is not just because (no pun intended) I come from Europe, I heard the same from several Americans here. It was rather mysterious how a country could/can afford such low taxes and such high debt. The Noda tax increase seems sensible, even though VAT is regressive, but if they carry out the proposed change to keep necessities like food on the low level, it would not be very different (still lower) than many other countries. The disaster of 2011 was hugely damaging, and it makes sense to divert public money to dealing with it. I work in (publicly funded) science and got a salary cut starting FY2013, with which I was in complete agreement.

      So in my opinion, the tax increase is defensible, but of course the immensely wasteful and ineffective spending is not. Big corporations profit, people still suffer. This should be the focus of the debate, not the small tax hike itself.

    7. Baudrillard Says:

      “I have read somewhere, and it struck me as well observed, that most other countries where the elite acted like the Japanese one would have long seen as bloody revolution.”

      No, it is completely normal in postmodern societies. As Debord points out, the masses are hypnotized by the media Spectacle, in Japan’s case the Spectacle is the Senkakus with a soundtrack provided by AKB48 saying “Banzai”! Debord says revolution in postmodern societies is therefore impossible.Self absorption and gratification becomes the only other outlet permissible (on weekends).

    8. Jim Di Griz Says:

      I agree with Anonymous Coward that Japan does have ridiculously low tax rates compared to most European countries. I would recommend tax increases to save Japan from it’s GDP:National Debt disaster-in-waiting, except that I believe that any action would be at least 20 years too late, Japan is like the Titanic; the iceberg has been struck, the sinking (however slow) is inevitable.

      As for the 2.1% reconstruction tax, it’s a small amount, I hardly noticed paying it. I don’t begrudge paying it except for all the other irrelevant and wasteful spending going on by the government. If Sick-note wants to print more money, why can’t he spend it helping the people of Tohoku? Why do we need more white elephant construction projects?

      At such a small amount, and bearing in mind all the other wasteful spending going on, the function of this tax must surely be political. What I mean to say (as Bayfield and other posters have indicated) is that the function of this tax is not to raise much needed funds (Japan seems to be wasting plenty of those just fine) but rather it is a symbolic act of national identity, that serves to join all Japanese (once again) in a top-down, imposed idea of what it means to be ‘Japanese’. All in it together, because ‘we are Japanese’. Of course, we NJ should pay because Japan has given us so much, hasn’t it? If you don’t like it, go home…again (actually, didn’t Kan say that this was a problem that only ‘We Japanese can fix’, so shouldn’t NJ be tax exempt on this?).

      The Japanese people won’t rise up because they have had it too good for too long. Whilst they are still offered dreams of a return to the bubble-jidai, they will continue to buy-into the hallucination. More unspoilt ‘dreamy days’. Maybe Sick-note is worried that a tipping point will be reached when the economy collapses through debt, demographics, and unemployment, and that is why he is seeking to change the constitution and therefore the country into a fascist police state?

      All of the issues on Debito.org are connected by the same handful of Japanese vested interests who serve themselves, and deceive the masses. These are not unrelated problems that we discuss, but merely the various symptoms of the same sickness at the heart of the Japanese state.

    9. Colin Says:

      Individuals also pay out of pocket for all healthcare services and use of highways. This probably contributes to a lower tax rate.
      The more people keep accepting tax hikes and no accountability for wasteful spending, expect to be used and abused.

    10. DR Says:

      Somebody’s making money out of all of this turmoil: http://www.businessinsider.com/soros-profiting-from-decline-in-pound-yen-2013-2#ixzz2LHe12kG9 I’d guess that he’s not paying any reconstruction tax!

    11. dude Says:

      #6 Anonymous Coward: If you have only lived in Japan for one year, then the local (residency) tax has not caught up with you yet. Wait until you get that bill to decide if Japan’s taxes are really cheap. BTW, it is based on your previous year’s income, so if your income ever decreases, as you pay high taxes (based on previous year’s earnings) out of decreased current year income, you will notice.
      Once you add all the taxes up, I think you will get it.

    12. DeBourca Says:

      @Colin

      That’s well worth pointing out. The basic tax rate is low, but factoring in healthcare, pensions, city taxes plus extras such as the reconstruction tax, it becomes crippling, unless you are in a full seishain or koumuin job(and how many foreigners are in those?). It’s also worth noting that the longer you work in Japan, the more your taxes increase as they are calculated on your previous year’s income, so newbies have it easy while those staying longer and attempting to have families and put down roots get hammered. Hmm, I wonder why?

      I have had repeated experience of employers levying full tax rates me on me. However, when I started to do my own taxes, I discovererd that you often don’t have to pay the full rates, depending on your circumstances. So, If your employer is levying the full whack of any of the myriad of taxes on your pay packet, it’s possible that they are not paying the full amount to the state and pocketing the difference.

      TBH, I wouldn’t trust any employer based in Japan, including the state. I would go into any deal with them expecting to be ripped off and lied to. That’s a terrible thing to admit, but it’s the way it is IME.

    13. Anonymous Coward Says:

      @Dude #11
      “then the local (residency) tax has not caught up with you yet”
      I am well aware of that, so in April my after tax income will be lower. Still, the total tax burden is low, I think even lower than in most states in the US. Sure you pay 30% of your health costs, but care is generally fairly priced. For my job, I think both before and after tax income is around the highest in the world (barring any further serious yen plunge).

      I repeat that it would be more appropriate to focus on wasteful spending than on the income side.

    14. matty b Says:

      I find in Japan that taxes are generally pretty low on a monthly basis, but a lot of large bills suddenly come in the mail. Tends to be the trend, right? Paid pretty decently, but then a bill comes around which wants a lot of that money. As a man without a family to take care of, working in Japan suits me fine, but I think it would be really hard to start a family as it would greatly increase the amount of large bills that would enter the mailbox.

      As for the “tax increase to pay for Tohoku”… it’s kind of a joke. The government knows that people won’t argue with such a noble cause, so the government does it. For the most part, the Tohoku region is a card that the government plays in order to get stuff or get away with stuff. Think of how the LDP used the Tohoku Card after The Disaster to try and bring down the DPJ in a vote of no-confidence. It was a card to play for power, they weren’t working together. A part of me thinks that the government wants Tohoku to stay as it is for a while and treat it as a cash cow of sorts. Think of how much they can get away with. The Tohoku Card is very valuable to the government. They can keep their asses stapled to desks and still funnel money into their coffers or justify whatever means.

      However, the Fukushima plant is running up costs. Finding ways to store all of that salt water is going to be a costly problem.

    15. James Annan Says:

      Be that as it may, I take home a far higher proportion of my gross income (even with the various taxes and deductions) than I ever did in the UK. Sales tax is much lower here too of course. I guess the idea is that when in a hole, dig far enough and you might come out the other side? Seems bonkers to me, but after a decade here, I’m quite at ease with not trying to understand too much…

    16. Jim Di Griz Says:

      @ Matty B #14

      ‘Finding ways to store all of that salt water is going to be a costly problem.’

      Not really Matty. TEPCO have a nifty ‘free’ solution….

      http://fukushima-diary.com/2013/01/tepco-officially-announced-to-discharge-contaminated-water-into-pacific-ocean/

    17. Jim Di Griz Says:

      Since I was talking about TEPCO….

      saw this in the Japan Times today;
      http://www.japantimes.co.jp/news/2013/02/20/business/japan-posts-its-largest-ever-monthly-trade-deficit/#.USTudhwSFMs

      ‘Sick-nomics’, yes, Sick-notes weakening of the yen has caused a slight increase in exports, but not enough to cover the increase in the cost of oil and gas imports caused by the very same weakening of the yen. Genius. Sick-notes a record breaker. What’s the betting that when Sick-note is pushed aside for all the friction he’s causing, the next LDP PM will reverse the 3 year wait to decide about nuclear power, and cite the self-inflicted increase in gas and oil prices as the reason why the reactors must go back on earlier rather than later?

      ========================
      Nation posts largest-ever monthly trade deficit
      Surging fossil fuel costs amid yen fall offset export rebound
      KYODO, BLOOMBERG
      FEB 20, 2013
      Japan registered its largest-ever monthly trade deficit of ¥1.6294 trillion in January as costs of fossil fuel imports surged with the yen sliding sharply, despite a moderate recovery in exports, the government said Wednesday.

      The value of imports rose 7.3 percent year on year to ¥6.4286 trillion, up for the third straight month, as oil product and liquefied natural gas imports jumped 33.7 percent and 11.4 percent, respectively, the Finance Ministry said in a preliminary report, noting the deficit was the largest among comparable figures available since January 1979.

      The deficit with China, Japan’s biggest trading partner, hit a record ¥654.6 billion against a backdrop of rising imports of communications devices such as smartphones and electronic parts, including semiconductors.

      Exports, however, climbed for the first time in eight months in January, up 6.4 percent to ¥4.7992 trillion, on the back of the weakening yen and hopes for a global economic recovery.

      Still, Japan’s trade balance is unlikely to improve soon, as Prime Minister Shinzo Abe’s policy of pursing drastic monetary easing could keep the yen on a downward path for the time being as oil and gas import costs look likely to grow as a result of the suspension of nuclear reactors at home, analysts said.

      “In the short term, the yen’s decline has a larger influence on import prices than export prices,” as about 77 percent of imports are denominated in foreign currencies, compared with nearly 62 percent of exports, said Taro Saito, senior economist at NLI Research Institute in Tokyo. “It would take around six months for export growth stemming from the yen’s fall to help reduce the nation’s trade deficit.”

      The ministry said the yen fell against the dollar by 12.4 percent from a year earlier in January, amid expectations of Abe’s economic policy, dubbed “Abenomics,” centering on the Bank of Japan’s aggressive monetary easing.

      The depreciation of the yen pushes up import costs, while it boosts exports by making domestic firms’ products cheaper and more in demand in other countries while raising the value of their sales revenue in yen terms.

      Imports have also ballooned in the country as demand from utilities for fossil fuels has surged amid the continued shutdown of most of the nation’s atomic power since the 2011 Fukushima nuclear disaster started.

      “The trade deficit means the yen can’t just keep weakening,” said Takeshi Minami, chief economist at Norinchukin Research Institute Co. in Tokyo. “Abe will probably restart some nuclear plants after the Upper House poll in July, as, without them, the costs to the economy are too great.”

      The nation imports more than 90 percent of its energy resources from overseas, according to government data.

      Mitsumaru Kumagai, chief economist at Daiwa Institute of Research, said exports appear to have bottomed out, but the pace of growth is still “tepid.”

      Exports to the United States rose for the first time in two months in January, up 10.9 percent, while those to China increased 3.0 percent, marking the first growth in eight months amid the waning effects of a Chinese consumer boycott of Japanese products sparked by the Senkaku isle dispute.

      Shipments to the 27-member European Union, however, remained lackluster, falling 4.5 percent in January and reflecting the sluggishness of the region’s real economy.
      ENDS

    18. Max Says:

      The question I ask when I get stopped by poloce to check ID, when I get asked for gaijin ID at hotels, randomly checked at airports despite I have been living here 12+ years, is why are we treated equally ONLY on taxes?? I would accept such a treatment if I had not to pay social walfare for those lovely old people who refuse to enter the onsen together with me….

    19. Welp Says:

      The better question is why non-permanent residents or dependents have to pay into unemployment “insurance”. By definition if they’re out of a job long enough to be eligible, their SOR will have been voided – you only have what, 3 months? after quitting to find a new job under your SOR before it becomes invalid. That’s just about how long it takes before you’re able to go to Hello Work and start collecting. Coincidence?

      The only real way a foreigner can collect it is if they’re fired (in which case they can collect within a week or something, right?) or their employer suddenly goes under (in which case the 3 month regulation does not apply ‘on a case by case basis’).

    20. Joe Says:

      @Max

      I fear that, if certain folk in power get their way, then you’ll get your wish soon enough: It’ll be ID checks for all, regardless of citizenship, with particular attention paid to any group those in power take a dislike to (left-wingers, environmentalists, non-conformists of any stripe….).

    21. Bruno Says:

      @Max #18

      To be fair, there is no way people would be able to tell whether or not you have lived in Japan for a long time just from your looks so it could be argued that authorities are erring on the side of caution when screening NJ visas and ID. Since they believe they have an “ethnically homogeneous society” it’s not hard for them to associate NJ-looking person = foreigner and up to no good.

      It would be interesting to find an ethnically Japanese (or Japanese-looking) person with foreign nationality living in Japan and ask him/her how they are treated regarding ID checks and profiling. That might give us a better insight on the fairness of this apparent discrimination.

    22. flyjin Says:

      Bruno, I have got a recent case for you. A young Chinese female tourist was surrounded by 4 males claiming to be police officers in Shinjuku station, but they all wore plain clothes and showed no ID. They then demanded that she tell them the room number of the hotel where she was staying. A few minutes later her male companion returned to her side and asked them who they were and what was going on, and they left.

      Source; I got it from the tourist’s mouth.

    23. Bruno Says:

      @flyjin #22

      That is indeed terrible.

      I’m not doubting these random ID checks and harassment happen (happened to me several times before), I just think it would be interesting to see a “foreign” Japanese person go through the same thing. I guess we could learn much from that.

      – Er… I take it you haven’t been reading Debito.org all that long.

    24. Bruno Says:

      Debito, I have been reading this site for quite a while, and have been a “victim” of this harassment by the police several times. The worst one was when they followed me for 2 blocks before stopping me and making some bullshit excuse after they saw my documents were in order.. but no need to get into the details here.

      I was just wondering how the Japanese authorities would deal with a “Japanese gaijin”, and wondering whether or not they would subject them to the same treatment all NJ face. Would answer many questions regarding whether this profiling is based on ethnicity or nationality. I’d argue that’d even make an interesting bit for TV or the newspapers.

      – “I was just wondering how the Japanese authorities would deal with a ‘Japanese gaijin’.”. Er, read the link I enclosed. Particularly this one. Also this one. Or you could try searching this site on your own. The point: The media doesn’t make much hoohah over official racial profiling. They make much more hoohah about the cops “doing their job” ferreting out NJ suspects by whatever means necessary.

    25. Andrew in Saitama Says:

      @ Flyjin #22

      It sounds like they were not police at all- which is probably more worrisome than random ( “random” being a very loose definition ) ID checks.

    26. Jim Di Griz Says:

      @ Flyjin #22

      Your comment raises an interesting point; the extent to which plain-clothes J-cops are patrolling Japan.
      I posted a link on Debito last year (can’t find it now) where an official police statement said that something like a third of cops on the streets wore plain-clothes.

      – I can’t find it either, so probably best not to make the claim until you do. But here’s a good example from last year with plain-clothes cops bearing hinky ID getting physical with an NJ outside his very apartment during a police Gaijin House search.

    27. Kaerimashita Says:

      Not going to make the one-third claim, but I had a personal experience with a cop in plain-clothes stopping me for the alien card (first of six) check in Ikebukuro Station a couple years ago.

      The scary part to me was whether those guys that stopped that Chinese woman were cops or not, still gives off creepy vibes wanting to know her hotel room number. Like a potential sexual assault moment waiting to happen had her companion not arrived. Just sick.

    28. Baudrillard Says:

      @ Bruno, “a foreign Japanese person?” Well, there was that case of the police picking up a woman (pun intended) in Kawaguchi City in 2010 because she looked foreign”” and when she clammed up and would not speak to them (because, as her family said, “she is not good at talking to strangers”-ah, only in Japan, lol), they assumed she could not speak Japanese- thus further “proving” to them she was an NJ.

      She was later released. Funny the family adopted the apologetic tone (for their daughter’s lack of communication skills), not the police.

      It was a perfect example of Japan’s internal cultural contradictions battling each other. Fear of strangers and anti communication, versus encroaching police monitoring of NJs, based on appearance and racial profiling. Both rooted in Xenophobia.

      Keep up the good work! (And hopefully Japanese themselves will be inconvenienced enough to complain).

    29. Mumei Says:

      Someone in the 総務 group at my company sent out a notice about this last month. The following link has relevant details:
      http://www.nta.go.jp/tetsuzuki/shinsei/annai/gensen/fukko/pdf/01.pdf

      I too am skeptical if this tax will ever be used to rebuild the areas affected. However, I was must shocked about this being a 25 year tax. I think 3-5 years would be plenty.

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