The Japanese government’s policy of increasing spending and hiking taxes whenever there is the slightest indication of improving economic numbers is so regular and predicable, would be boring were it not so pathetic.
This week Japan’s Finance Ministry submitted its 2007 budget to the government, reporting that tax revenues have increased by 16.5 percent due to the current economic recovery. They follow this with a plan to increase government spending for the first time in two years and to cut the issuance of government bonds.
Faced with all of this good economic news, Finance Minister Koji Omi could not resist the urge to do what seems to come so naturally to people in his position.
Omi indicated that to accelerate fiscal rehabilitation, discussion must start by late next year on revenue reforms, including a consumption tax hike. The ruling bloc has shelved talk of a sales tax rise until after next summer’s Upper House election to avoid a voter backlash.
You know, there are times when I can just imagine some Nagatacho high muckamuck exhorting hordes of navy blue clad bureaucrats onward with words like, “We’ve nipped recoveries in the bud before, boys, and by God we can do it again!”
Ah, who needs an economic recovery anyway. I’m rather partial to unending recession.
What’s even more annoying is when the government proposes these tax increases because some other country does it. Hey, lets increase taxes because the E.U. has a higher consumption tax rate than us. Seriously, government bureaucrats need to come up with more creative solutions to their problems than “some other obscure country instated a similar program on a test basis twenty years ago to address a completely unrelated problem and failed, and that’s why that it is the appropriate policy for today.”
And then the nagatacho wonder why Japanese consumption isn’t growing at the rate they would find desirable. Newsflash-when you tax something, you deincentivize that action. If you want people to buy more, you don’t do it by making everything more expensive.
A memorable quote comes to mind “Nothing is more permanent than a temporary government program.”- I would extend this to taxes as well.