The world’s common sense, “taxpayers are customers,” has not taken root in Japan.

No need to “file a tax return, it’s a hassle!”

We will abolish the year-end tax adjustment and have all citizens file their tax returns.”

Digital Minister Taro Kono was again under fire on social networking sites when he suddenly made this appeal at the announcement of his pledge for the LDP presidential election.

When Finance Minister Shunichi Suzuki said “tax payment is at the discretion of lawmakers” over the LDP faction’s slush fund case, freelancers and self-employed people posted “#Boycott tax returns” in rapid succession. However, it is probably those who receive salaries from companies, such as company employees, part-timers, and part-time workers, who responded to Minister Kono’s pledge by saying, “Filing income tax returns is such a hassle.

For salaried workers, income and inhabitant taxes are deducted from their monthly wages and bonuses, and their employers make a year-end adjustment to complete the payment of income and inhabitant taxes. Therefore, most salaried workers do not need to file their own income tax returns.

Therefore, salaried workers may not be aware of the taxes they are paying.

Japan is a welfare state, and its citizens pay their own taxes in order to receive social security benefits. However, unfortunately, the public’s interest in what taxes they are paying and how those taxes are being used is not very high, ” he pointed out.

Kyoko Hiraishi, a licensed tax accountant and secretary general of the TC Forum (Taxpayers’ Charter of Rights), points out that “the TC Forum is a voluntary organization formed in 1993 by licensed tax accountants, lawyers, researchers, and small and medium-sized business groups from across Japan. It has been working for about 30 years to establish a “Charter of Taxpayers’ Rights” to protect taxpayers’ rights.

Only in Japan is there a “year-end adjustment”?

Mr. Hiraishi continues.

One of the reasons for the lack of interest is the “year-end adjustment. Under this system, it is difficult to see how taxes are calculated and how much you owe. I am not saying that this is the case for all salaried workers, but I feel that there is a general lack of understanding.

However, this is not the fault of the people, but rather because the government obliged employers to pay taxes and make year-end adjustments when it introduced the tax return system after World War II.”

Is the year-end adjustment a system that exists in other countries?

I believe that Japan is the only country that requires employers to make year-end adjustments for their employees.

In Germany, it seems that employers who pay salaries to 10 or more employees are obliged to make year-end adjustments, but I have heard that it is an elective system where the employee may not have to undergo year-end adjustments if he or she so chooses.

In the U.S., there is no year-end adjustment system, but rather a tax filing system. Salaried workers also file their own tax returns, so I think they are more tax-conscious.

The right to file tax returns for those who wish to do so on their own should be recognized.”

On its official website, the TC Forum notes that one of its proposals for establishing taxpayers’ rights is that “the right to file tax returns should be widely recognized for the more than 40 million salaried employees. Is there any part of the proposal that is consistent with Minister Kono’s idea of “tax returns for all citizens”?

We at the TC Forum believe that an elective system should be introduced into the year-end adjustment system. Even if salaried workers want to file their own tax returns, they cannot do so under the current system.

The year-end adjustment requires a declaration of deductions for dependents and insurance premiums, and salaried employees must submit these documents to their companies.

For example, if they have not remarried after divorce or bereavement, they can receive a widow’s deduction, and if they have a family member with a disability, they can receive a disability deduction. Even though these are fairly personal circumstances, they must be reported to the company in order to receive the deduction. How is this a privacy issue?

With that in mind, I think the right to file tax returns for those who wish to do so on their own should be recognized.”

Minister Kono has also explained his thoughts on the abolition of year-end adjustments, which he announced in his pledge, on his official website and on X.

According to the plan, each time a business pays its employees, it sends information on income and other items in digital form to a centralized government agency. The contact organization uses the information to collate the individual’s income, insurance premiums, income tax, and local taxes, and displays the information on the MyNa Portal. This information is automatically input into e-Tax and eLTAX via MyNa Portal.

You can’t just push a button and go to …….”

At the press conference on May 5, he stated, “Eventually, all of your tax return sheets will be automatically entered, and if you look at the numbers and push a button, your tax return will be completed. He also said, “It will create an environment that encourages people to take a hard look at how their taxes are being used.”

However, it seems that many citizens believe that Minister Kono’s goal is to promote the use of the MyNa card rather than to raise taxpayer awareness.

For example, when applying for deductions for medical expenses, the myNa Portal and e-Tax are linked so that a year’s worth of medical expenses can be automatically entered on the tax return.

Payment for self-funded medical treatment, transportation expenses such as cabs for hospital visits, over-the-counter medicines, disposable diapers, etc. are also covered.

However, only insured medical expenses are linked to the myna insurance card, and other expenses are not reflected in the myna portal. I wonder if it will be possible to automatically input such details, which vary depending on the individual’s circumstances.

If the tax return system is to be used as Mr. Kono suggests, it will require a considerable period of preparation on the part of the public. As is the case with both the miner’s insurance card and the invoice system, I think that the way to forcefully start the system by setting a date when the public is not convinced is an infringement of the taxpayers’ rights in the first place.

Only in Japan there is no “tax audit” or “collection” without prior notice…… “Charter of Taxpayers’ Rights”.

Tax payment is defined as an “obligation” in the Constitution, but not as a “right. How should we understand “taxpayers’ rights”?

The ” right of taxpayers” does not mean that we, as taxpayers, have the right to claim our rights. It is important that the rights are well protected.

In the U.S., where taxpayers play a leading role, the taxation agency treats taxpayers politely as “customers. The Korean Charter of Taxpayers’ Rights also positions taxpayers as “customers. The idea that “the taxpayer is the main actor” is becoming a global standard.

In Japan, however, the opposite is true. The main actor is not the taxpayer but the taxation agency. From the Edo period (1603-1868), when taxpayers paid tribute, through the Meiji period (1868-1912), and up to the present day, the image of taxes being taken by the authorities has not been dispelled, and those in charge of taxation still have a sense of being in the hands of the authorities.

Since the enactment of the “Taxpayers’ Charter on Tax Investigations” in France in 1975, Western countries have made progress in establishing systems to guarantee taxpayers’ rights, and this movement has extended to Asian and African countries as well.

According to the TC Forum, Japan is the only OECD (Organization for Economic Cooperation and Development) member without a Taxpayer Charter of Rights or Taxpayer Rights Protection Act.

The TC Forum visited the U.S., Canada, and France, which have taxpayer rights charters, and received a recommendation from the OECD that these countries should also establish a taxpayer rights charter. Why is it that Japan still does not have a Charter of Taxpayers’ Rights?

The reason why we do not have a Charter is that the Ministry of Finance does not want to recognize taxpayers’ rights. In fact, because they do not recognize taxpayers’ rights, tax audits and collections are still being conducted without prior notice.

Penalties have been greatly enhanced.”

In 2011, 17 years after the TC Forum’s announcement of the “Draft Outline of the Tax Administration Procedure Law,” tax audit procedures were legislated under the Democratic Party of Japan (DPJ) administration with the amendment of the “Act on General Rules for National Taxes. However, the revised Act on General Rules for National Taxes “does not protect the rights and interests of taxpayers,” according to Mr. Hiraishi.

The revised Act on General Rules for National Taxes clearly states that advance notice must be given. However, advance notice is only a “principle. However, the revised Act on General Rules for National Taxes clearly stipulates that prior notice must be given, but only in principle.

In the past 10 years, penalties have been tightened. Japan is going in the opposite direction of Western countries, and is moving in a more restrictive direction. That is my impression.

Despite having one of the lowest tax burden rates among developed countries, Japan is said to have a much higher sense of tax pain than the Scandinavian countries, which are known for their high tax burdens. There is no reason why tax awareness and understanding of taxpayers’ rights should remain low.

In Japan, the lower the income, the higher the tax burden and social insurance premium burden. Unless the people raise their voices in opposition to what they consider to be wrong, neither the government’s policies nor the tax system will change.

We at TC Forum have not given up on the realization of the enactment of the Taxpayers’ Charter of Rights. Even though the regulations for tax audit procedures have been established, the same as before, audits are still being conducted without prior notice.

The Charter of Rights is necessary to get the Taxation Agency to change its attitude toward taxpayers, and we are planning to appeal for the enactment of the Charter again this fall to the Diet members’ Finance and Fiscal Affairs Committee and the Finance and Monetary Affairs Committee.

Kyoko Hiraishi, certified tax accountant.’ She has served as the Executive Director of TC Forum since 2001. Author of “2019 Consumption Tax Revision for Small Companies and Sole Proprietors: A Quick Guide” and “<Latest Edition> Consumption Tax Practice and Filing for Small Companies and Sole Proprietors” (both from Nihon Jitsugyo Shuppansha) “Understanding by XX! Receipts and receipts that fall under expenses” (Kanki Shuppan), etc.