\u3000The projected cost of the special fixed-sum cash benefits (uniformly 100,000 yen per person) implemented as part of the \u201cEmergency Economic Measures to Cope with the Novel Coronavirus (COVID-19)\u201d, is 12,734,414 million yen (i.e. about 12.73 trillion yen). (See Note 1).
\u3000Assuming that the tax revenue is 1% of the consumption tax rate (national \/ local) under the reduced tax rate system is about 2.1 trillion yen (See Note 2), the budget total of the special fixed-sum cash benefits is equivalent to the consumption tax rate of 6 (12.73 \u00f7 2.1) %. It will be a budget amount that can lead to a reduction of the consumption tax. The special fixed-sum cash benefits of 12.73 trillion yen and the consumption tax reduction of 12.73 trillion yen (with a tax rate of 6%) are the same in terms of universalist policies that do not limit specific individuals or households. However, the special fixed-sum cash benefits of 12.73 trillion yen without the consumption tax reduction, and the consumption tax reduction of 12.73 trillion yen (with a tax rate of 6%), involve different legislative measures, different speeds of policy implementation and different administrative costs, and different beneficiaries, and this implies different types of a consumption tax system.
\u3000If we assume that the consumption tax rate is a uniform 10% and the basic consumption is 1 million yen per person per year, providing a fixed-sum cash benefit of 100,000 yen means that the consumption tax amount related to the basic consumption will be refunded uniformly. The refund amount is 100,000 yen (10%\u00d71 million yen).\u3000
\u3000In other words, tax payment = tax rate \u00d7 (annual consumption\u2212basic consumption) = (tax rate \u00d7 annual consumption) \u2212 (tax rate \u00d7 basic consumption) = consumption tax paid\u2212fixed-sum benefit; so if you consider the proportional consumption tax and the fixed-sum benefit as a set, the set will be a \u201cprogressive\u201d consumption (value-added) tax system. \u201cProgressive\u201d means that the higher the annual consumption, the higher the average consumption tax rate (consumption tax payment amount \u00f7 annual consumption). (See Note 3).
\u3000In this regard, since the fixed-sum cash benefit is a negative poll tax, it is possible to present the \u201cprogressive value-added tax\u201d, which is a combination of VAT (value added tax) and a negative poll tax, as a new expenditure tax. (See Note 4).
\u3000On the other hand, the consumption tax reduction of 6% is a proportional consumption tax (VAT) of 4%. Therefore, it is possible that there is a difference in the consumption tax system between providing a fixed-sum cash benefit of 100,000 yen and having a consumption tax reduction of 6%.
\u3000Since this special fixed-sum benefit is a temporary measure, it cannot be considered as a progressive consumption tax system unless it is continued from next year onward. Therefore, we may examine whether we should continue the fixed-sum cash benefit in some way from next year onward, and after the coronavirus crisis has settled down, whether we should consider the redemption of financial resources regarding public bonds for the emergency economic measures like as the reconstruction tax for the Great East Japan Earthquake.<\/p>\n\n\n\n