Japan’s Social Insurance Agency is going after English-language teaching companies, suspecting them of failing to enroll their full-time foreign workers in mandatory national pension and health insurance schemes. Nova, Japan’s largest English school chain, may end up having to pay billions in back payments.

Non-enrollment of full-time employees is illegal in Japan, where the Health Insurance Law and Employees’ Pension Law stipulate that companies must enroll all workers who have been in Japan for over two months in both the health insurance and pension systems, regardless of nationality.

Under these laws, the burden of payment is split between employer and employee, with each paying half the monthly premium amount.

The issue came to the attention of investigators after a union filed a complaint. According to a union official, “The purpose of this action is not to punish the companies but to make sure that the people who work for these companies are getting adequate health care. It is expensive; it doesn’t offer the coverage it should, but it is better than not having it at all.”

Though Kazuo Komura held the post of Mayor of Namioka for only 47 days before the town merged with the city of Aomori, the merger qualified him for a retirement payment totaling 3.1 million yen. Though government workers normally are not eligible for retirement allowances until they have work for at least six months, officials decided to create a “special provision” to allow mayors who lose their jobs by mergers.

Komura was elected after a campaign during which he stated his opposition to the merger.

As the old joke goes, I thought what I saw was the light at the end of the tunnel when suddenly I realized it was a train coming at me.

Though the government is stridently denying it, it appears as if the current Japanese economic “recovery” could possibly end up going the way of previous up turns - nowhere at all.

Industrial production fell in February from the previous month, while unemployment rose. The strength of the yen is making it difficult for Japan to export itself out of recession. All the while, the government is trying to urge everyone to take solace in the fact that the economy is merely flat-lining instead of heading downwards.

Other signs of possible trouble on the horizon include a sharp drop in household spending and retail sales, along with rising unemployment. Japan’s benchmark Nikkei 225 Stock Average is tanking as foreign investors are pulling out of Japanese stocks in fear of the country’s economic future.

As always the government is clueless. They are using the media to create the perception the recession that has endured for more than 10 years is over, and so now it is time to — raise taxes, of course!

Just today, the Japanese Diet voted to phase out a 20% income tax cut that was adopted in 1999 for the purpose of stimulating the economy. By eliminating the cut, taxes effectively will be raised by 10% from their current levels in 2006 and then another 10% the following year.

The government claims the money is needed to curb public debt used to pay for things like roads that go nowhere, lining every last inch of the nation’s riverbeds with concrete, massive slush funds maintained by police and other public officials, and exorbitant salaries paid to do-nothing paper pushers and bureaucrat pooh-bahs. Apparently, the notion of cutting costs never has entered the Nagatacho mind.

Of course, this will not be the first time that Japanese politicians, when faced with a budding economic recovery, have acted like ivory hunters setting upon the last living pachyderm on the face of the earth. As Bloomberg columnist William Pesek Jr. writes:

It doesn’t take much to recall episodes where Japan created fresh economic headwinds. In 2001, for example, it tightened fiscal policy, worsening a decline. In 2000, the Bank of Japan raised interest rates amid modest growth. And in the late 1990s, politicians raised taxes, scuttling a pick up in demand.

Oh, and by the way. . .

The 20% income tax increase is a totally separate issue from the government’s other plan to raise the consumption (sales) tax from the current 5% to 15% or even 20%.

The Nihon Keizai Shimbun is reporting that Japan is hoping to start exporting rice to China as early as this summer.

Though Japan has asked China to lift its ban on rice imports, there was no word whether Japan will be lowering the 407% tariff it slaps on rice it imports from other countries.

Thanks to news.3yen.com.

Japanese news reports are filled with reports and stories about how this time it’s for real.

The economy is on the rise and Japan is definitely on the road to recovery.

I wonder how long it will take the clowns out in Nagatacho to kill this one?

Hitachi is planning to offer a new lineup of notebook PCs that are said to offer enchanced security because they are not equipped with a hard disk.

Since the notebook is unable to store any data, there is no danger of client data or other confidential information being lost or stolen. It acts as a terminal that performs all of its tasks only by interacting with server.

JP

Want to bet the Japanese taxman is already licking his chops?

Kirin, the country’s largest brewer, announced they will enter the “third beer” market in April to get their share of the earnings generated by Sapporo and Suntory.

What’s “third beer”? Japan taxes beer based on malt content, so about 10 years ago an enterprising brewery came out with a beverage called happoshu. The tax authorities define beer as having at least 67% malt, and happoshu, sold under the brand name Hop’s, contained less than that amount. The lower malt content meant it technically wasn’t beer, which meant it was taxed at a lower rate, making it cheaper. The government originally translated happoshu as “sparkling spirits”, but cooler heads prevailed, and it was changed to “low malt beer”.

Happoshu sales skyrocketed and other companies entered the market. To show how much they appreciated the breweries’ entrepreneurial spirit, the Japanese government raised taxes on happoshu—twice. But it’s still cheaper than beer; the tax on a 350 ml. can of beer is 77 yen, while it’s 46.99 yen for a can of happoshu. Naturally, it depressed sales.

Undeterred, Sapporo Beer came out last February with yet another tax-beating beverage, Draft One. This is the so-called third beer. It also has been called “a malt-free beerlike alcoholic beverage”, a “quasi-beer”, and probably dozens of other scatologically derived epithets by beer lovers in different states of intoxication. Draft One contains no malt. In fact, it is made from hops, sugar, and green beans. You can find one man’s opinion of the stuff at Beeradvocate.com.

Draft One was an instant success. Sapporo hoped to ship 10 million cases during its first year, but wound up shipping more than 18 million cases. Regardless of how it tastes, quasi-beer has a tax rate of 24.20 yen for a 350 ml. can, just a little shy of half the tax on happoshu.

So now Kirin and Asahi will jump into the market in April. Kirin expects to sell 19.7 million cases this year. They do not say when they expect the taxman to pounce again, though that day is sure to come before long.

Here’s the full article in the Japan Times. Another article well worth reading is at the Allaboutbeer site, called Taxing the Pour. It is an overview of the interaction of taxes and beer throughout history. (It ain’t just the Japanese.) One of the choice factoids presented is that the penalty in a French city during the 13th century for brewers who failed to pay their taxes was chopping off their right hand. I think it’s safe to say they had no problem collecting taxes at all.

There’s no telling what the government will come up with if you give them enough money.

A case in point is Japan Tobacco, 50% of whose stock is held by the government, with the other 50% traded on the Japanese stock exchanges. JT’s origins date back to Japan’s tobacco monopoly introduced in the 16th century. They were organized as a company in 1898 and also given a monopoly on salt. They became the Japan Tobacco and Salt Public Corporation in 1949 and were partially privatized in 1985.

They don’t explain why the government took monopoly control of these commodities, but money seems to be the reason. They are still a cash cow today. The percentage of smoking adults in Japan is the fourth highest in the world, behind South Korea, China, and Russia. JT manufactures foreign brands for sale in Japan through licensing agreements and controls 80% of the market. They have diversified their business operations, and in Japan they own the Burger King franchise, control sales of Pillsbury products, and have pharmaceutical interests. They are the world’s fourth largest tobacco company.

What do they do with all their cash? One thing they did was open the Japan Tobacco and Salt Museum in Tokyo, which has an English-language website. Let’s not go into what would happen if such a facility were open in a Western country. Instead, let’s just use the website to go inside for a tour.

Their homepage announces, “the Museum is a many-sided institution that specializes in the collection and study of materials relating to tobacco and salt. The quality and interest level of its exhibitions and other events make it a favorite with the public.”

There is learned commentary on the role of tobacco and salt in human culture. The first floor exhibit shows the spread of tobacco from South America to the rest of the world. There is a display of tobacco implements and “cigarette packets and cartons from many lands”. Second floor exhibits focus on tobacco in Japan. A website photo shows some youngsters watching a video in the computer booth and video library.
The third floor is devoted to salt. Dioramas show salt technology in ancient and modern Japan. It also has a section named, “A Media Adventure: Salt in Today’s World”. And there’s more!

The museum has a collection of about 1,700 ukiyo-e woodblock prints portraying tobacco and salt use during the Edo period. In fact, a special exhibit of these prints is running right now until February 27. The print shown here is called, “Eight Fine Views of Edo: Evening Snow on Mount Machitsu”. There are two women playing a dice game while a man watches, smoking a long, thin kiseru pipe. (Good for one hit of tobacco at a time.)

The museum has an active exhibition schedule and next up is a show of 20th century tobacco posters. Past exhibits have featured matchbox and cigar label collections. Special shows during summer vacation take kids on a trip to Dr. Salt’s Adventure Island.

You owe it to yourself to take a relaxed tour of their website. And if you don’t take the tour, I will track you down and tell you about chindogu again!

Why is it that every time the Japanese economy shows the slightest sign of stirring out of its extended catatonic state, some government official grabs a microphone and starts talking about the need to raise taxes?

This time it is the Finance Minister himself, Sadakazu Tanigaki, who told the Diet recently that the fairest way to pay for social welfare would be to raise the country’s consumption tax. This is an idea that politicians have been kicking around for quite some time, with some saying that the consumption tax will need to be raised from its current 5% to 20%.

Why it is fair to tax the entire populace to pay for social security costs when not everyone is eligible to receive benefits is something that is never explained. But even a 400% rise in the consumption tax will, no doubt, elicit nary a peep from the Japanese people, who will be the ones footing the bill. The Japanese submit to mistreatment from their government so meekly that it sometimes seems that what we interpret as polite bowing is actually just bending over.

JP