The Cabinet approval and the submission of the consumption tax bill to the Diet have caused the resignations of many ardent followers of Former Democratic Party of Japan (DPJ) leader Ichiro Ozawa from various important positions both in the government and in the party. Some of the high profile resignations include Senior Vice Health Minister Yoshio Maki, State Secretary for Internal Affairs Toru Kikawada, Senior Vice Education Minister Yuko Mori and Vice Internal Affairs Minister Ryo Shuhama. Though the DPJ headquarter is unwilling to accept their resignations, the number is expected to rise over twenty who protest the current administration and the DPJ leadership.
Incessantly reminding the continual rise of the cost of social security and the shrinking population, Prime Minster Yoshihiko Noda and Deputy Prime Minster Katsuya Okada attempt eagerly to persuade their fellow party members as well as fellow Japanese of the need to rise the consumption tax. The bill would raise the current 5 percent consumption tax to 8 percent in April 2014 and to 10 percent in October 2015.
While admitting the dire need to fund the ever-rising cost of social security, we must point out that the current DPJ leadership conveniently forgets the very reason, for which the majority of Japanese people supported and helped the party to gain the historic victory in 2009: the Reform of the Government.
The structure of the current Japanese government is such that bureaucratic interests come before that of the people. The problem is not just the tight connections between the industries and the bureaucracies. The major problem is that the bureaucracies continue to engender various Independent Administrative Institutions as well as pseudo-businesses that monopolize various segments of industries. Many bureaucrats and pubic officials find stable and comfortable positions as soon as their forced early retirement. What is worse is that they would find their family members and friends similar positions. This cycle has stifled Japanese economy and excluded many motivated and hardworking people from their due positions.
One of the quintessential examples of what I have just described as Japan’s systemic flaw took place recently. After the unforgivable loss of the Pension Fund by AIJ Investment Advisors, The Ministry of Health, Labour and Welfare revealed that among 581 Pension foundations, the number of ex-bureaucrats who had found their stable and comfortable positions turned out to be whopping 721. There is more to this story. The report indicates that more than 90% of 721 ex-officials had no experience whatsoever in handling pension fund.
This is the type of the systemic illness that the Japanese people hoped and anticipated the DPJ to reform. The reform effort, for the most part, has been rather on the surface level and not substantial. Does the government need to secure better resources for social security? You bet. Does the government need to raise the revenue via tax? Probably. Is now the best and most convincing time for raising the consumption tax? Mr. Ozawa and his followers don’t think so.
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