Takahiro MIYAO (GLOOCM)
While I appreciated Richard Katz' rejoinder to clarify his explanation and position regarding current tax issues, I must repeat the point that I made in my previous comment, that is, "the main battle line has been drawn between the government's Tax Commission chaired by Hiromitsu Ishi who advocates the MOF's position on one hand and the Council of Economic and Fiscal Policy headed by Minister Takenaka on the other," a point that does not yet seem to be fully appreciated by Richard Katz. Also it is important to point out, as I said in my previous comment, that Finance Minister Shiokawa, an opportunistic politician, has been shifting his position somewhere between these two camps, whatever he is saying now.
What is misleading about Katz' explanation at least in his initial article is that he criticizes Takenaka as if Takenaka were in the same camp as the MOF in proposing flattening tax rates. While Katz admits that Takenaka's proposal to balance the budge is his "long-term program," implying that Takenaka does not intend to do so in the short term unlike the MOF, he still says that "whether Takenaka's proposals is better than the MOF is hardly the issue." I think it is one of the current policy issues which are considered important especially among business leaders and the general public as well. Katz should have clearly distinguished between what he considers important and what is considered important by the general public (policy makers) in Japan. For that matter, contrary to what Katz guessed, I myself do not consider corporate tax cuts terribly important to revitalize the Japanese economy, although my reasoning (taking account of asset deflation) may well be different from Katz'.
Regarding real estate taxes, Richard Katz and I already had intensive discussions in connection with deflation in Japan on the GLOCOM Platform:
See Miyao "Deflation in Japan: Moderator's Summary and Comments":
http://www.glocom.org/debates/200203_miyao_sum/index.html
What is "normal" is a matter of semantics. Do you consider the current upward trend in housing value in the U.S. "normal" or "abnormal"? It depends. In my view, the most abnormal thing about real estate in Japan is a never-ending downward movement in land value since 1991, leading to asset deflation and worsening the non-performing loan problem.. It has become so bad that this problem has finally been recognized even by Koizumi, Tanenaka, and other "reformers." So it is likely to see some kind of tax cuts (most likely, transaction taxes and capital gains taxes) on real estate to be adopted for next fiscal year. I would also propose cuts in holding taxes to combat asset deflation. For this issue, see Miyao "Japan's Economic Problems: Diagnosis and Prescriptions":
http://www.glocom.org/debates/20020517_miyao_japan/index.html
|
