This Month at the Tax Office – principal items only
- Income tax estimated prepayment — notice issued; deadline to apply for a reduction: July 15
- Individual resident (inhabitant) tax — payment due on the date set by municipal ordinance
- Corporations with an April fiscal year-end — final returns for corporate tax and consumption tax due June 30
- Corporations with an October fiscal year-end — interim returns for corporate tax and
consumption tax due June 30
A note on how to pay. As electronic filing spreads, tax offices have largely stopped mailing out
paper returns and payment slips, and local taxes are moving the same way. Beyond Direct Pay (direct debit) through e-filing, you can also settle by credit card, smartphone app, or at a convenience store — though smartphone and convenience-store payments are capped at ¥300,000 in tax per
transaction. If anything about payment methods is unclear, please get in touch with the office.
A Tax Cut Won’t Cure This Inflation.Look to the Yen Instead.
The story of why your grocery bill is climbing begins, improbably, with a 19th-century insurance policy — and ends somewhere a consumption tax can’t reach.
It hardly seems possible that the New Year was only yesterday, and yet here is June, with
the rainy season at the door and summer close behind. There is a simple way to tell the
seasons apart: when the air drifting through an open window feels cool, it is still spring;
when it begins to feel warm, summer has arrived. The only question, as in every year, is
just how hot it will get.
The heat I have in mind, though, is the kind that shows up on a receipt.
Consider two venerable Japanese names: Tokyo Marine and Yasuda Fire, the latter a
forerunner of today’s Sompo Japan. Why would two firms in the very same business —
casualty insurance — call themselves “Marine” and “Fire”? The answer is written into their
founding. Tokyo Marine, established in 1879, was Japan’s first marine insurer, created to
cover the risks borne by the cargo ships that carried the nation’s trade when the sea was
the center of commerce. Yasuda Fire followed in 1887 as a fire insurer; its original name
was, fittingly, Tokyo Fire Insurance. A company’s name, it turns out, is a fossil of the risk
it was born to manage.
That history is not a digression. One of the hidden engines of today’s high prices is, of all
things, marine insurance.
Casualty insurance — the fire coverage on a ship or a building, the policy on a car — rests
on a quiet but ironclad principle: damage from war is excluded. It is simply not covered.
And the Strait of Hormuz is now, in every practical sense, a war zone. So the coverage that would ordinarily protect a tanker no longer applies. The tankers have stopped; the flow of resources through one of the world’s great chokepoints has stalled; and the consequences are rippling outward as higher prices and emptier shelves across the globe.
Japan’s political response to that pressure is a familiar one: cut the tax. The government
is weighing a reduction in the consumption tax on food, and Prime Minister Takaichi is
said to be aiming to decide within June, with a bill possibly going before the current
session of the Diet. Some of the sharpest objections, tellingly, come from the business
world — the very people who understand the tax best.
Their reasoning is worth following, because it exposes a trap in the way we think about tax cuts. The appeal of a cut is borrowed from the deflationary years, when we could assume that prices simply would not rise. In that world, the arithmetic is reassuring.
Picture a food item priced at 100. At today’s rate it reaches the register at 108. Cut the tax to 1 percent and the price falls to 101 — a visible, satisfying saving. But that is the
deflationary picture. Now introduce 20 percent inflation. The underlying price climbs to
120, and even at a 1 percent tax the item rings up at 121.2. Trace the shelf price alone —
108, then 101, then 121.2 — and what the shopper sees is not relief. It is a number that has simply gone up.
A government may announce, quite truthfully, that it has cut taxes. But if the price in front
of the customer keeps rising, no one will feel it. Businesses, meanwhile, would shoulder
enormous costs to carry out a measure whose benefit has become invisible.
There is another path. The force driving prices up is, in large part, a weak yen. Rein in that depreciation, and inflation can be held to a tolerable level — with no tax cut at all. The economy is never quite that tidy, of course. But a cool-headed decision to treat the cause rather than the symptom could change the entire picture.
Summer is coming. Whether it turns out to be a scorcher may be beyond our control. The
temperature of our prices, happily, is not.
