Abstract
In Japan, the year 2014 brought about major developments for social security finances , with the implementation of The Comprehensive Reform of Social Security and Tax (hereafter The Comprehensive Reform), which had been a concern for a long time.
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Notes
- 1.
The right to benefits is not a guarantee of an absolute amount of social security services. For example, in the public pension, a macroeconomic slide could reduce pension benefits in the future.
- 2.
In the case of special-purpose tax, it is strongly related to specific public services, but in Japan, the share of tax revenue for special-purpose tax is not that great, so it is not considered here.
- 3.
As of fiscal 2015, within the consumption tax rate of 8%, the national consumption tax rate is 6.3% and the local consumption tax rate is 1.7%. Within the tax revenues from the national consumption tax , excluding the 22.3% that represent the financial resources for local allocation tax subsidies (the allocation tax rate), 76.7% is the financial resource for social security. Further, within the local consumption tax rate of 1.7%, a 0.7% portion (this portion was raised in April 2014) is allocated to social security for local governments. Even when the hike in the tax rate to 10% scheduled for October 2019 comes into effect, it has been determined that the portion gained from this rise in tax rate will be the allocated to social security. At this time, the plan is to reduce the allocation tax rate of consumption tax to 19.5%.
- 4.
It cannot be assumed that every person pays income tax .
- 5.
As refunding bonds are issued from special accounting of the Government Debt Consolidation Fund, they are abstracted here.
- 6.
Strictly speaking, since public expenditure is expected to benefit future generations, such as from pubic work projects, it is included in general expenditure. Therefore, while it cannot be said that general expenditure is completely for the benefit of the current generation, here, for the sake of brevity, the discussion is simplified.
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Adachi, Y. (2018). Prologue: Outlook and Challenges for Social Security Finances. In: The Economics of Tax and Social Security in Japan. Springer, Singapore. https://doi.org/10.1007/978-981-10-7176-8_1
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DOI: https://doi.org/10.1007/978-981-10-7176-8_1
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