Tax reform proposals, including the abolition of inheritance tax, are being debated, bringing issues that could affect Japan’s finances and national strength to the fore. The abolition of child allowances for high-income households has also been raised, drawing attention to future developments.
While it was announced that President Trump expressed concern about yen depreciation at the Japan-U.S. summit, the Bank of Japan indicated at this month’s Monetary Policy Meeting that it intends to raise its policy rate from around 1.0% to around 1.25%. The interest-rate differential with the United States is not narrowing, and concerns have been raised about further yen depreciation and mounting fiscal strain, heightening vigilance over a resurgence of fiscal financing.
The long-term interest rate temporarily rose to the 3.1% range, raising concerns that continued increases could put further pressure on public finances. Some believe that if the Bank of Japan responds by purchasing government bonds again, the vicious cycle of yen depreciation and higher prices will not stop.
Some have called for the abolition or reduction of inheritance tax worldwide. Fujimaki Takeshi (藤巻健史), former head of Morgan Bank’s Tokyo branch, said that having people devote themselves to economic activity rather than spending energy on tax saving would help improve Japan’s productivity. Cases in which prime land in central Tokyo was subdivided because of inheritance tax and then purchased by foreigners have also been criticized. Fujimaki Takeshi (藤巻健史) estimates that inheritance tax could be abolished by raising the consumption tax by 0.5%.
The author expresses the view that government benefits are unnecessary for people with high incomes or substantial assets, and opposes child allowances and free education for high-income households. The article also proposes considering alternatives such as medals for people who decline their pensions and municipal honorary citizenship programs.