Noda officially gives in on tax, welfare reform

Prime Minister Yoshihiko Noda and Democratic Party of Japan executives officially endorsed changes to the government’s social security and tax reform bills Wednesday, while signalling the Diet session will be extended, possibly to early September.

Noda was forced to postpone a vote on the revised bills in the Lower House beyond Thursday’s scheduled end of the Diet session, given the fierce opposition from DPJ members against the planned consumption tax hike.

The prime minister had been keen on having the contentious tax hike bill approved before Thursday, but with that bill and other key legislation still hanging fire, the DPJ proposed extending the session to Sept. 8 in a meeting with opposition parties, which didn’t give an immediate answer, party sources said.

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Confidence in Japan lost without tax reforms

Japan must devise a concrete plan for tax reform to avoid deepening the nation’s massive debt and the loss of confidence in the economy, the new fiscal policy minister said on Wednesday.

The comments from Kaoru Yosano come as Prime Minster Naoto Kan faces what analysts say is a make or break battle over the issue, which has proved divisive with voters.

‘If we keep going with no fiscal discipline, allowing the stock of public debt to grow larger or continuing to borrow more than we receive in tax revenue, international confidence in Japan could be gradually eroded,’ Yosano told reporters.

‘Both the fiscal authorities and the Bank of Japan must pay adequate attention to that point in managing economic and fiscal policy,’ he said.

Yosano was speaking as Kan’s new-look government on Wednesday took its first steps toward formulating a tax-hike proposal and seeking talks with the private sector.

On Friday the premier appointed the 72-year-old conservative former finance minister and fiscal hawk Yosano as his new fiscal policy minister, also putting him in charge of tax and social welfare.

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Hatoyama caught by the Taxman – Failed to report 72 mil. yen income from stock sales

Prime Minister Yukio Hatoyama failed to declare 72 million yen in income from stock sales in 2008.

Hatoyama sold more than 150,000 shares in 10 different stocks, including those listed on the First Section of the Tokyo Stock Exchange.

The stock gains also were not mentioned in his income report for 2008. However it is required to be submitted under law as it is mandatory for Diet members to disclose their salaries, assets and other sources of income.

His office has since corrected the failure and paid the tax. It also has amended the report and submitted a corrected version to the secretariat of the House of the Representatives Monday, a Hatoyama aide said.

A comparison of post-general election asset reports submitted in September 2005 and asset reports of the Hatoyama Cabinet on Oct. 23 show that Hatoyama sold 151,190 shares of 10 stocks, including those listed on the TSE’s First Section.

The 151,190 shares break down into 30,306 shares in Tokyu Corp., 27,702 in Shimizu Corp., 24,209 in Sumitomo Corp., 19,478 in Mitsubishi Estate, 15,428 in Kirin Holdings Co., 13,000 in Mitsubishi Electric Corp., 11,240 in Toyobo Co., 7,805 in Tokyo Electric Power Co., 1,650 in Kohnan Shoji Co. and 372 in Oji Paper Co.

The stocks are worth about 124 million yen or $1,371,682.46 USD when calculated based on Friday’s closing prices. In his income report submitted in April, Hatoyama did not declare profits from stock sales.

If dividends and profits from stock sales are obtained by transactions through the shareholder’s “specific account” that is supervised by a brokerage firm, and the tax is collected at source, there is no need to report the dividends and stock profits. Transactions that do not go through the “specific account” should be reported after filing a tax return.

Acknowledging the tax failure, Hatoyama’s office said: “We corrected it and paid the tax. Before the stock certificates of listed companies went electronic in January, we sold the stocks [in question] following the advice of a brokerage firm. After finding that we had failed to declare income when we filed a tax return, we corrected the tax return report immediately and submitted it.”

Chief Cabinet Secretary Hirofumi Hirano told a news conference Monday morning, “This is a personal matter for the prime minister.”

Source: The Yomiuri Shimbun
photo: AZUHIRO NOGI/AFP/Getty Images