Don’t be fooled by the “tax hike glasses! Stealth tax hike” awaiting us after ’24… Is there a self-protection plan?

Is it appropriate for this year’s Kanji character “tax”?　Finally, a year that ends with allegations of “tax evasion” by LDP officials…

The writing of Kiyomizu-dera Temple in Kyoto by Seinori Mori, the temple’s chief abbot, is a tradition at the end of the year. The kanji for this year was ” tax. Prime Minister Fumio Kishida contributed to the selection of “tax. He called it a tax increase or a tax cut. Finally, the LDP leaders are suspected of tax evasion. His approval rating is at its lowest.

The government and ruling party’s fiscal 2012 tax reform plan does not even provide a roadmap for a defense tax hike, which has a fixed deadline for securing the revenue source.

Yoichi Miyazawa, chairman of the tax system research committee, said at a press conference, “Unfortunately, the recent political situation is quite severe for the LDP, and we have decided not to make a decision this year.

This is probably in consideration of Prime Minister Kishida’s wishes, but the importance of national defense is only increasing, including responses to North Korea, the Taiwan contingency, and cyber warfare. What do you think? I would like to see the government make a serious effort to do what is necessary without worrying about its reputation.

As for the review of personal income taxation, the government said it would continue to study the issue and postponed a specific tax increase. But this is no time to be relieved. There are a number of “stealth tax increases” that will start in 2012 and beyond. Let’s take a look at them.

Tax Reform Proposal “Seals the Color of Tax Hikes,” but… “Stealth Tax Hikes” Not Visible or Understandable from the Outside

There is no definition of a stealth tax hike. Some are not described as tax hikes, but they are an increase in the burden, some are not visible from the front, but they are tax hikes, and some are not discussed, but they are clearly tax hikes. As citizens, it is important to be informed. However, it is very difficult to understand.

1_First tax return under the “invoice system

The invoice system started on October 1, 2011, and the first tax return will be filed this year.

Under the invoice system, in principle, taxable purchases made by persons other than invoice-issuing businesses, such as tax-exempt businesses and consumers, cannot be deducted for taxable purchases. This tends to put pressure on sole proprietors and corporations with whom they do business to register for invoices.

In order to become an invoice issuing business, one must be registered, and one cannot be registered unless one is a taxable business.

Sole proprietors and corporations that have had sales of less than 10 million yen and have been tax-exempt businesses are also taxable businesses when they register for invoices. The ordering party can then claim a credit for taxable purchases.

However, former tax-exempt businesses that newly became invoice-issuing businesses are required to file consumption tax returns even if their taxable sales for the base period are less than 10 million yen, as long as their registration has not lost its validity.

For those who were formerly tax-exempt businesses, if they do not add the consumption tax portion to their sales, they will have less money on hand for the consumption tax they pay.

2_Extension of the “Special Reconstruction Income Tax” period

Included in the last FY 2011 Tax Reform Proposal was the extension of the Special Reconstruction Income Tax period.

The Special Reconstruction Income Tax is an additional tax on income tax, which is to be declared and paid together with income tax at 2.1% of the base income tax amount for each year from 2001 to 2007. This is an important financial resource to support the reconstruction from the Great East Japan Earthquake by all the people.

The tax rate of the Special Reconstruction Income Tax will be lowered from 2.1% to 1.1%, while the taxable period will be extended. The reduced tax rate will be allocated for the time being to taxes to strengthen defense capabilities.

The addition to income tax will remain at 2.1%, but the tax will be increased by the amount of the extension of the tax period.

The extension period is considered to be the length necessary to ensure that the total amount of reconstruction funds is secured so as not to affect the steady implementation of reconstruction projects, and will be considered over a period of about 14 years.

3_”Forest Environment Tax and Forest Environment Concession Tax”

The forest environment tax will be imposed on individuals who have a domicile in Japan from FY’24. The tax is 1,000 yen per person per year, together with a per capita levy of the individual inhabitant tax. The entire amount of the tax revenue will be transferred to prefectures and municipalities as a forest environment concession tax.

4. “Extension of 5-year payment period” of national pension premiums under consideration

The year 2012 is the year of the once-every-five-years financial verification of the public pension system. Deliberations continue at the various subcommittees of the Social Security Council in preparation for the revision of the Pension Law in the following year, ’25.

The majority of the participants agreed to extend the premium payment period for the National Pension Plan from the current 40 years to 45 years, which would mean that the payment of premiums until the age of 60 would be extended to 65 years. This is understandable, considering the increase in the employment rate during old age.

Individual contributions will increase. At the same time, the national treasury contribution, which covers one-half of the cost, will be increased. The challenge is to secure financial resources.

At the subcommittee meeting, some members suggested reducing the public pension exemption and imposing a new income tax on high-income earners, which would be used to finance the increase in the national treasury’s share of the cost.

The pension system and the tax system must be balanced in a comprehensive manner. We would like to focus on the fiscal verification.

5_Change in the system of “gifts during one’s lifetime” effective January 1, 2024.

There are two methods of taxation for gift tax: “calendar year taxation” and “taxation at the time of inheritance,” and the recipient of a gift (donor) can choose the taxation method for each donor. Both taxation methods are subject to major tax reform in 2011 and will take effect on January 1, 2012. The tax will be increased for calendar year taxation.

Under the calendar year taxation, property acquired from a decedent as a gift during a certain period of time prior to the start of inheritance is added to the inheritance at the value of the gift when the inheritance tax is calculated. This fixed period has been extended from three years to seven years.

Of the total amount of property donated during the four-year period of the extension, up to ¥1 million will not be added to the value of inherited property. On the other hand, the taxation system for settlement at the time of inheritance will have a basic allowance of 1.1 million yen, which was not available before. This will improve the usability of the system.

6_”Change in the method of valuation of condominiums” acquired by inheritance, etc.

Inheritance valuation of condominiums has become a hot topic due to the “taxation of townhouses.

The new valuation method will be applied to condominiums acquired by inheritance, bequest or donation on or after January 1, 2012.

Last year’s 2011 Tax Reform Proposal stated in its section entitled “Inheritance Tax Valuation of Condominiums,” that the tax authorities would examine ways to optimize the valuation of condominiums where there is a large discrepancy between the market sales price and the inheritance tax assessed value based on the tax notice.

The new valuation method presented by the National Tax Agency is a method of adjusting the assessed value based on four indices that cause the inheritance tax assessed value to deviate from the market value: age of the building, total number of floors, floors on which the building is located, and the degree of narrowness of site equity.

The impact is assumed to be greater for condominiums on higher floors.

The basic self-protection measure is to “know the system. As citizens, it is also important to “know how it is used.

We have highlighted the major revisions that are likely to increase the burden on us. Of course, there are some that will reduce our burden, and we hope you will forgive us for being biased in our coverage of these issues.

We will gladly accept burdens such as the special income tax for reconstruction and the forest environment tax that are necessary for the national land and the affluent life of the people.

However, “reduce this and spend that” and the use of tax revenues that differ from their intended purpose need to be explained to the public in a way that they can understand. On the other hand, it is possible that the public, with the help of the media, will show a high level of interest until a decision is made, but a year later, when the new law comes into effect, they will be less interested, saying, “Really? and the interest is low when the tax is enforced a year later.

This is a time when household budget management is becoming more and more important due to high prices. We would like to pay more attention to taxes and social security.