[55th note money publication] Chapter 95: Consumption Tax - The Tax Hike Timer

Chapter 95: Consumption Tax - The Tax Hike Timer

[She knew everything.]

[A confession from the system side, and a 14-year-long verification]

From this point on, this is no longer just a discussion.
It is a record of an [incident] in the public forum of the National Diet where those operating the system admitted themselves that [in a liberal economy, prices are not cleanly passed on].
Satsuki Katayama left a question, Hiroshi Ando took it over, and I want you to see the moment it finally led to a [conclusion].

--80% deduction means double the tax, the complete form means six times--

On the screen, Satsuki Katayama was answering about the invoice system.

Regarding purchases from tax-exempt businesses, the purchase tax credit is not immediately lost in its entirety.

80% deduction.

70% deduction.

50% deduction.

30% deduction.

The system has transitional measures in place.

80%.

Hearing just those words, it seems like the majority is protected.

Mio stopped the video.

Mio:
"If 80% can be deducted, isn't the burden on taxable businesses small?"

Aoi:
"If you use sales as the denominator, it looks small."

Mio:
"The denominator again?"

Aoi:
"Yeah. This time, let's put added value and profit back into the denominator."

Three numbers that don't change

First, let's consider a simple transaction.

Assume a standard tax rate of 10% for everything, and that the amounts are the total tax-inclusive prices actually traded.

The sales of tax-exempt business B are 5.5 million yen.

Taxable business C purchases from B for 5.5 million yen and sells it for 6.6 million yen.

The tax-inclusive value added from C's perspective is,

6.6 million yen - 5.5 million yen = 1.1 million yen

is the result.

What is important here are three numbers.

Sales are 6.6 million yen.

Purchases are 5.5 million yen.

Tax-inclusive value added is 1.1 million yen.

Even if the invoice system is introduced, these three things have not changed at all.

Before the introduction of the invoice system

Before the introduction of the invoice system, C could apply the purchase tax credit for purchases from B, even if B was a tax-exempt business.

C's consumption tax is,

6.6 million yen * 10/110 - 5.5 million yen * 10/110
= 600,000 yen - 500,000 yen
= 100,000 yen

which results in this.

The tax-inclusive value added created by C is 1.1 million yen.

The consumption tax is 100,000 yen.

The burden rate on the tax-inclusive value added is,

100,000 yen ÷ 1,100,000 yen ≒ 9.1%

is the result.

Mio:
“So, it’s about 9.1% of the value added created by C.”

Aoi:
“Up to this point, it can be explained as a standard value-added tax.”

80% Deduction

The invoice system has begun.

B remains a tax-exempt business and cannot issue invoices.

However, as a transitional measure, C can deduct 80% of the tax amount equivalent to the purchase.

80% deduction.

This term makes it sound as if 80% is being protected.

But, if you look at it from the other side, it means this:

You may deduct 80%.

You must not deduct 20%.

Let’s calculate C’s consumption tax.

6.6 million yen × 10/110 - 5.5 million yen × 80% × 10/110
= 600,000 yen - 400,000 yen
= 200,000 yen

Mio looked at the equation twice.

Mio:
“Wait.”

Aoi:
“Yes?”

Mio:
“C’s sales remain at 6.6 million yen, right?”

Aoi:
“They haven’t changed.”

Mio:
"Are purchases still at 5.5 million yen?"

Aoi:
"They haven't changed."

Mio:
"Is the added value still at 1.1 million yen?"

Aoi:
"They haven't changed."

Mio:
"Nothing has changed, yet the consumption tax alone has gone from 100,000 yen to 200,000 yen!"

Due to the 80% deduction, C's consumption tax has doubled.

The formula for the tax increase timer

Let the rate that cannot be deducted be the non-deductible rate D.

C's consumption tax is,

6.6 million yen × 10/110 - 5.5 million yen × (1 - D) × 10/110

which becomes:

Let's break this down.

6.6 million yen × 10/110 - 5.5 million yen × 10/110 + 5.5 million yen × D × 10/110
= 100,000 yen + 500,000 yen × D

In other words,

Consumption tax = 100,000 yen + 500,000 yen × non-deductible rate D

is the result.

The initial 100,000 yen is the original consumption tax calculated from C's own added value.

The latter 500,000 yen × D is the additional consumption tax added because the purchase tax credit was reduced.

As the timer progresses, C's consumption tax becomes this.

Non-deductible rate 0%.
Consumption tax 100,000 yen.

Non-deductible rate 20%.
Consumption tax 200,000 yen.

Non-deductible rate 30%.
Consumption tax 250,000 yen.

Non-deductible rate 50%.
Consumption tax 350,000 yen.

Non-deductible rate 70%.
Consumption tax 450,000 yen.

Non-deductible rate 100%.
Consumption tax 600,000 yen.

Sales remain at 6.6 million yen.

Purchases remain at 5.5 million yen.

Value added remains at 1.1 million yen.

As time passes, only the deduction is whittled away, and only the tax amount increases.

Mio:
"This isn't a transitional measure."

Aoi:
"What does it look like to you?"

Mio:
"A tax increase timer."

The true nature of "just two percent"

Regarding the 80% deduction, it is sometimes explained that the burden is small.

The tax rate is 10%.

What cannot be deducted is that 20%.

Therefore, the burden is effectively about 2%.

However, that 2% is a figure based on the tax-excluded purchase price as the denominator.

In this model, the tax-excluded price of a 5.5 million yen tax-included purchase is 5 million yen, and the tax equivalent amount is 500,000 yen.

That 20% is,

500,000 yen x 20% = 100,000 yen

is the result.

When viewed against the 5 million yen in pre-tax purchases, it is indeed 2%.

However, the source of funds for C to absorb that additional tax amount is not the purchase price.

It is the value added created by C and the profit remaining from that.

Let's return the 1.1 million yen of value added to the denominator.

Before the introduction of the invoice system,

100,000 yen ÷ 1.1 million yen ≒ 9.1%

After the 80% deduction,

200,000 yen ÷ 1.1 million yen ≒ 18.2%

The tax burden rate on value added has risen from approximately 9.1% to approximately 18.2%.

It has doubled.

Mio:
"It's not just 'a mere 2%'!"

Aoi:
"2% is a figure based on pre-tax purchases as the denominator, you see."

Mio:
"What if you return the value added to the denominator?"

Aoi:
"The tax burden rate doubles."

Returning profit to the denominator

Furthermore, let's return the profit to the denominator.

The ordinary profit margin of small and medium-sized enterprises varies by fiscal year and industry, but it is generally in the single-digit percentage range.

Here, we assume C's profit margin before the additional burden caused by the invoice system was 3.5%.

C's sales are 6.6 million yen.

The conventional profit is,

6.6 million yen × 3.5% = 231,000 yen

is the amount.

The consumption tax added by the 80% deduction is 100,000 yen.

Assuming that prices, purchases, labor costs, etc., remain unchanged and C absorbs the additional tax amount,

231,000 yen - 100,000 yen = 131,000 yen

the profit decreases to 131,000 yen.

The ratio of the additional tax amount to the conventional profit is,

100,000 yen ÷ 231,000 yen ≒ 43.3%

At the 80% deduction stage, the additional tax amount alone wipes out about 40% of the conventional profit.

Also, the final payment amount of 200,000 yen is equivalent to about 87% of the conventional profit of 231,000 yen.

Mio:
"Even though we can deduct 80%, the additional portion alone wipes out 40% of the profit!"

Aoi:
"The denominator the system shows is sales. But the denominator that determines whether a business can survive is profit."

If you use sales as the denominator, it's 2%.

If you use value-added as the denominator, the tax burden rate doubles.

If you use profit as the denominator, about 40% disappears just from the additional tax.

It is the same 100,000 yen.

Just by changing the denominator, the view changes.

The true nature of market pressure

C cannot absorb this additional 100,000 yen.

For a business with a profit of 231,000 yen, 100,000 yen is not a minor burden.

Therefore, C makes a demand of B.

I want you to register for the invoice system.

If you won't register, I want you to lower your prices.

If you can't do that either, I will switch to another business that can issue invoices.

Until now, cases where tax-exempt businesses were excluded from transactions were sometimes explained like this:

The business partner didn't know about the 80% deduction.

Even though the burden was still small, they didn't understand the system and cut off the tax-exempt business.

However, when you put profit back into the denominator, a different picture emerges.

At the 80% deduction stage, the additional tax amount is about 40% of the original profit.

It wasn't that they reviewed the transaction because they didn't know the system.

It is possible that they couldn't absorb it even after understanding the system.

Mio:
"I thought, why would they cut off the transaction when there is an 80% deduction?"

Aoi:
"That's because at the 80% deduction point, 40% of the profit is additionally shaved off."

Mio:
"Then, the exclusion from transactions is not a misunderstanding."

Aoi:
"As a market pressure, it was in the formula from the beginning."

Whether B pays or C pays

Consider the case where B registers for the invoice system and uses the 20% special measure.

B's sales tax equivalent amount is,

5.5 million yen × 10/110 = 500,000 yen

The tax amount payable under the 20% special provision is,

500,000 yen × 20% = 100,000 yen

which is the result.

On the other hand, if B does not register and C uses the 80% deduction, the additional tax amount for C is,

5.5 million yen × 20% × 10/110 = 100,000 yen

which is the amount.

B registers.
B pays 100,000 yen.

B does not register.
C's tax payment increases by 100,000 yen.

Who pays changes.

However, in this simple model, the increase in revenue for the government is 100,000 yen in both cases.

Mio:
"Isn't it just making them choose whether B pays or C pays!"

Aoi:
"C will ask B to register to avoid the additional tax"

Mio:
"It puts tax increase pressure on taxable businesses and registration pressure on tax-exempt businesses"

Aoi:
"That is the market pressure created by the 80% deduction"

The timer does not stop

The 80% deduction is not the final destination.

According to the schedule after the FY2026 tax reform, the deductible percentage for purchases from non-invoice issuers, such as tax-exempt businesses, will be gradually reduced.

From October 2026, a 70% deduction.

From October 2028, a 50% deduction.

From October 2030, a 30% deduction.

From October 2031 onwards, no deduction allowed.

When applied to this model, C's tax payment amount will progress.

With an 80% deduction, 200,000 yen.

With a 70% deduction, 250,000 yen.

With a 50% deduction, 350,000 yen.

With a 30% deduction, 450,000 yen.

With zero deduction, 600,000 yen.

Compared to the 100,000 yen before the invoice system was introduced, it is six times higher in its complete form.

Complete form

Assuming B cannot issue an invoice, the transitional measures have ended, and C's input tax deduction is no longer recognized at all.

C's consumption tax is,

6.6 million yen x 10/110 - 0 yen
= 600,000 yen

Sales remain at 6.6 million yen.

Purchases remain at 5.5 million yen.

The value added created by C also remains at 1.1 million yen.

Even so, C's tax payment amount increases from 100,000 yen to 600,000 yen.

Against 1.1 million yen in value added, 600,000 yen in consumption tax.

The burden rate on value added is,
600,000 yen / 1.1 million yen ≈ 54.5%

.

Mio:
“The value-added remains at 1.1 million yen, but the tax amount alone has increased sixfold!”

Aoi:
“It is difficult for C to absorb that as is.”

Mio:
“Then, what should we do?”

Aoi:
“Have B register. Have them lower their prices. If that is impossible, have them removed from transactions.”

Mio:
“So, tax-exempt businesses must either become taxable businesses or exit the market.”

Aoi:
“In the B2B market, it is moving toward those two choices.”

Transitional measures are not a system to eliminate tax hikes.

It is a system that increases the burden on the market while gradually raising the non-deductible rate.

At the point of 80% deduction, the tax amount is doubled.

In its complete form, it is six times higher.

The timer is already running within the system.

The City

The video ended.

Mio's pale face was reflected on the darkened screen.

Mio stood up and looked out the window.

The city at dusk.

A small printing shop.

A designer working in an old multi-tenant building.

A sole proprietor loading tools into a car.

A writer revising a manuscript.

A flower shop before closing.

Every business has sales.

However, not all of those sales are profit.

Paying for inventory.

Paying rent.

Paying labor costs.

Paying electricity bills.

Repaying loans.

At the very end, a small amount of profit remains.

The system screen displays an 80% deduction.

However, if an additional 100,000 yen in tax costs falls on a business with a 3.5% profit margin, about 40% of the original profit disappears.

While it looks like 80% is protected, 40% of the profit is shaved off.

And as time passes, the deduction rate drops.

The tax amount proceeds to double, 2.5 times, 3.5 times, 4.5 times, and 6 times.

No one has pressed the button.

Sales, inventory, and added value have not changed.

Even so, the timer continues to run within the system.

A company employee entered the flower shop.

They receive a bouquet for a store opening celebration.

May I have a receipt, please?

The shopkeeper operated the small cash register.

Beep.

A thin strip of paper was spat out with a sound.

On it, the sales amount and tax rate were printed.

However, there was nothing written anywhere about how much the added tax had eroded the shop's profits.

The livelihood of the business operator required to register, the reduced compensation, and the lost transactions were not recorded.

All that was recorded was the tax amount calculated by the system.

Somewhere in the city, a cash register beeped again.

Beep.

That sound was, once again today, the sound of someone's business being whittled away.

Reference Materials

・February 26, 2019, Minutes of the House of Representatives Committee on Financial Affairs

・National Tax Agency 'FY2026 Tax Reform Special Feature' Revisions regarding Invoices

・Small and Medium Enterprise Agency 'Basic Survey on Small and Medium Enterprises' 2021 Survey

・Small and Medium Enterprise Agency 'Basic Survey on Small and Medium Enterprises' 2024 Survey

Notes

* Models A, B, and C are simplified tax-inclusive models designed to make the effects of the system easier to see. At the House of Representatives Committee on Financial Affairs on February 26, 2019, the Ministry of Finance explained that the average taxable sales of tax-exempt businesses are approximately 5.5 million yen, the value-added rate is approximately 28%, and the value-added is approximately 1.5 million yen. In this article, that 5.5 million yen business was placed in a transaction chain, and C's sales were calculated at 6.6 million yen and purchases at 5.5 million yen.

* All tax rates are set at the standard 10% rate, and rounding, reduced tax rates, tax-exempt transactions, simplified tax systems, and other individual circumstances have been omitted.

* The 3.5% profit margin is a model value used to demonstrate the impact on the market. The ordinary profit margin on sales for small and medium-sized corporations in the Basic Survey on Small and Medium Enterprises was 3.25% for fiscal year 2020 and 4.37% for fiscal year 2023, varying by year and industry.

*The impact on profit is a simple calculation assuming C absorbs the additional tax amount due to the invoice without changing prices, purchases, labor costs, etc. In reality, the burden can shift to multiple entities in the market through price increases, requests for price reductions, adjustments to compensation/labor costs/profits, and changes in business partners.

"The management is cheating."

SSR [Anomaly 017 | Official Cheat]

Rarity: SSR
Attribute: System/Darkness/Management
Race: System-Implemented Anomaly
Danger Level: ★★★★★★★★★★★★★★★
Unique Ability:
<<Rule Alteration>>
<<Deduction Chain Severance>>
<<Tax Base Expansion>>
<<Internalization of Reporting Destination>>

Flavor Text

When the officials who are supposed to protect the system rewrite the rules themselves,
the anomaly reaches its final form.

The tax rate does not rise. However, what can be deducted decreases.

As a result, the tax base expands, and the burden on businesses quietly multiplies.

Moreover, the officials call it "optimization."

Effect Description

When this card enters the field,
it partially invalidates "deductions" on the opponent's field.
The invalidated deductions
are added directly to the tax base.
Furthermore, as long as this card exists,
the opponent will find it difficult to perceive this effect as a "tax hike."

True Name

An anomaly where the officials rewrite the rules and implement specifications that only they can win with.

Weakness

Visualization of the structure
Formulation of the tax base
The question of "what can no longer be deducted"

The reporting destination is the management

Who determines that this system is unfair?
Who corrects the cumulative taxation caused by the severance of deductions?
Who overturns the explanation that 'it is not a tax increase'?
The ones who made the rules are the operators.
The ones who receive the tax revenue are also the operators.
The ones who explain the system are the operators.
The ones who handle complaints are the operators.
And the final arbiter is also the operator.
Mio:
"Where do we report this?"

Aoi:
"The operators."

Mio:
"Who makes the ruling?"

Aoi:
"The operators."

Mio:
"Who receives the tax revenue?"

Aoi:
"The operators."

Mio fell silent for a while.
Then, she asked timidly.

Mio:
"What is the final answer?"
Aoi read the text displayed on the screen.

It is a specification.

That was the final ruling in a world where the operators cheat.

Mio:
"Aoi.
What should we do from now on?"

Aoi:
"Know the truth."

Mio:
"And if we don't?"
Aoi looked toward the city for a moment.

Aoi:
"The same as always."

Before you know it, a bill passes through the Diet.
Without you noticing, a system is created.
Your livelihood is whittled away.
Your business is whittled away.
Even so, you don't know what is happening.
Because you don't know, you cannot ask questions.
Because you cannot ask questions, you cannot oppose it, nor can you change it.
And even if you realize you are being whittled away—
You have no words to explain it.
Aoi said briefly.

"If you don't know, you won't even realize you've been robbed."

Mio looked at the street in silence. A register sound rang out at some shop.

Beep.
Today again, a tax assessment is placed on someone's sales.
Someone's deduction is cut off.
Someone's profit is whittled away.
But if you don't know the mechanism, it just sounds like the noise of shopping.The sound rang out once more.

Beep.That sound was—

It was the sound of someone being whittled away again today.

[14 Years Later: Checking the Answers] Hiroshi Ando took over the questions left behind by Satsuki Katayama

Reference Video:

[She knew everything.]

[Confessions from the System Side and Checking the Answers 14 Years Later]

From here on, I will intentionally repeat myself.
This is because this is not merely a Diet interpellation.
The "smooth and appropriate price pass-through" that the consumption tax system has assumed, and what is actually happening in the real market.
It is a record of an "incident" where those two things collided head-on in the public arena of the Diet.
In a liberal economy, prices do not move as the system intends.
Just because costs have risen does not mean you can pass the full amount on to the price.
Just because the consumption tax rate has risen does not mean you can raise the selling price by that amount.
Even if you cannot pass on the price, the burden of the consumption tax does not disappear.
It shifts to the business operator's profits, wages, bonuses, investments, and cash flow.

At that moment, the issue of consumption tax changes from a problem of "price pass-through" to a problem of who is forced to bear the tax cost.

2012.
A politician pointed out its dangers in the National Diet.
It was Satsuki Katayama.
And 14 years later.
Hiroshi Ando took over the question left behind by Satsuki Katayama.
Sitting on the side receiving the question was Satsuki Katayama, who had become the Minister of Finance.
This is also a record of how someone who criticized the system from the outside changes their words when they reach the pinnacle of that system.

In 2012, she knew everything

“It will become something that can no longer be handled.”
2012.
As a member of the opposition party, Satsuki Katayama strongly warned about the impact of a consumption tax hike on the economy.
Housing.
Local economies.
Small and medium-sized enterprises.
The local soba shop.
The ordinary barbershop.
Small business owners who cannot raise prices even if they want to.

Representative Katayama pointed out with concrete examples that the consumption tax does not end as a mere “burden on the consumer.”

For example, the local soba shop.

This is not just a question.

It is an answer presented in the form of a question by someone who knows the consumption tax system and the reality of the market.

Large chains with uniform prices nationwide might find it easier to raise prices.
But what about small shops supported by local customers?
What about the local soba shop?
What about the ordinary barbershop?
Can you easily tell a shop that might lose customers by raising prices that “since the tax rate has gone up, you should just pass that on to the price”?

At the time, Representative Katayama stated that there was a survey showing that 50% to 70% of small and medium-sized enterprises with annual sales of 30 million yen or less were unable to pass on the costs.

Furthermore, she pointed out that 340 billion yen, which is about half of the total tax arrears, is consumption tax.

In other words, she knew.

The consumption tax is explained as being “intended to be passed on to prices.”

However, in the real market, the weaker the business, the less they can pass it on as intended.

The consumption tax was a tax that could not function unless the system's intentions and the market's reality matched.
Satsuki Katayama in 2012 knew that contradiction.

14 years later, the question returned

14 years later.
This time, Hiroshi Ando, who returned to national politics as a Diet member for the Sanseito party, began to ask the same question in the National Diet.

Sitting in the answer seat was Satsuki Katayama, who had become the Minister of Finance.

The first thing Representative Ando confirmed was who is liable for paying consumption tax.
Legally, who bears the obligation to pay consumption tax?
Is it the consumer?
Is it the business operator?
The answer was clear.
The person liable for paying consumption tax under the Consumption Tax Act is the business operator.
The government explains that consumption tax is intended to be ultimately borne by the consumer through price pass-through.
However, that is an expectation regarding the economic burden.
It is a separate matter from the tax liability under tax law.
Under tax law, the consumer is not the person liable for paying consumption tax.
It is the business operator who declares and pays the consumption tax.
At this point, Representative Ando pushed the questioning further.
Does the so-called 'tax gain'—where it is claimed that business operators keep the consumption tax received from consumers as their own profit instead of paying it to the tax office—exist under the system?
To this, Finance Minister Katayama replied that legally, such a relationship does not exist.
Consumers are not liable for paying consumption tax under the Consumption Tax Act.
Therefore, there is no legal structure where a business operator holds tax money that a consumer should pay and keeps it as profit without paying it to the state.
Legally, tax gain does not exist.
Here, the narrative of consumption tax that has been told for many years begins to waver.

The illusion of complete pass-through

Many people understand consumption tax as follows:
First, there is the cost.
Then, a reasonable profit is added to it.
And on top of that, a 10% consumption tax is added.
The consumer pays that 10%, the business operator holds it temporarily, and pays it to the tax office later.
In this model, the business operator's profit is not reduced by the consumption tax.
Labor costs are not reduced either.
This is because the consumption tax is completely added to the outside of the selling price and is entirely borne by the final consumer.
However, for this model to hold, strong prerequisites are required.
All business operators must be able to fully add the consumption tax amount to the price after securing their costs and necessary profits.
In other words, it is a market with a 100% price pass-through rate.
If all transactions were truly conducted this way, there would be almost no loss-making companies.
There would be no low-wage workers.
There would be no price squeezing.
Since they can add the consumption tax portion to the price after securing their profit, there should be no business operators who run into cash flow problems because they cannot pay the consumption tax.
But reality is different.
There are loss-making companies.
There are low-wage workers.
There is price squeezing.
There are business operators with weak price negotiation power.
There are shops that would lose customers if they raised prices.
There are business operators who cannot sufficiently pass on costs to the selling price even when raw material costs rise.

The beautiful model of 'cost + reasonable profit + consumption tax' does not represent the real market.

It is an assumption placed there to make the system work.

The reason why consumption tax occurs even when there is a loss

The amount of consumption tax to be paid is roughly calculated by the following formula:

Consumption tax
=
Tax amount on sales - Tax amount on purchases

In a simple model with a standard tax rate of 10% and all amounts including tax, it can be expressed as follows:

Consumption tax
≒
(Taxable sales - Taxable purchases) × 10/110

What is important here is that, unlike corporate tax, profit is not calculated by subtracting all expenses from sales.
Even expenses necessary for business, such as salaries, social insurance premiums, and interest payments, are not always eligible for tax credit on purchases.
Therefore, even if there is a loss in terms of corporate tax,

Taxable Sales - Taxable Purchases > 0

consumption tax will be incurred.
Whether a business is in the red or the black does not stop the calculation of consumption tax.
This is because consumption tax looks at the difference between taxable sales and taxable purchases, not profit.
Generally, businesses add some kind of value to purchased goods before selling them.
A business that keeps selling goods purchased for 100 yen for 50 yen will not survive.
A manufacturing business that keeps using 100 yen worth of raw materials to sell products for 50 yen will not survive either.
Therefore, as long as the business continues, generally,

Taxable Sales - Taxable Purchases > 0

will be the result.
Even if the company as a whole is in the red, this difference can still remain.

That is why consumption tax is incurred even for businesses in the red.

It is not that "consumption tax may be incurred" even when in the red.
As long as the business is generating added value, the structure is such that consumption tax is incurred even if it is in the red.

Pre-empting Added Value

Taxable sales minus taxable purchases generally corresponds to the added value newly created by that business.

To simplify,

Added Value
≒
Taxable Sales - Taxable Purchases

Furthermore, that added value can generally be viewed as,

Added Value
≒
Profit + Personnel Expenses

and can be understood as such.
Therefore, the structure of consumption tax can generally be expressed by the following formula.

Consumption Tax ≒ Added Value × 10/110

To simplify further,

Consumption Tax ≒ (Profit + Personnel Expenses) × 10/110

This is what happens.
Here, what is going on?

There is a single pie called the added value created by the business.

Originally, that added value is distributed to workers' wages and corporate profits, etc.
However, in a world with consumption tax, the government's share is determined before that distribution.

The government takes the consumption tax first.

Corporations and workers divide the remaining value-added.
If it can be fully passed on to the price, the burden might be pushed outside the business.

However, if the price cannot be passed on, the consumption tax remains within the value-added.

It cuts into profits.
It cuts into the source of funds for wage increases.
It cuts into bonuses.
It suppresses hiring.
It delays capital investment.
It puts pressure on cash flow.
The tax burden does not disappear.
It only changes where the burden is placed.

The words of Diet member Ando, 'We are told to pay the consumption tax before we have the funds to raise wages,' represent this structure.

Consumption tax is a tax where the government secures its share first from the single wallet of value-added.

Corporations and workers divide the rest.
This is the 'pre-emption of value-added'.

'Consumption tax included' written on the receipt

Diet member Ando also delved into the display on receipts.
For example, suppose you buy a product for 1,100 yen.
The receipt says,
'Consumption tax included 100 yen'
So, what is this 100 yen legally?
The government's response was as follows:
It is an amount equivalent to the consumption tax that should be levied on that transaction, and it is part of the consideration for the sale of taxable assets, etc.

In other words, even if 'consumption tax' is written on the receipt, it is not the tax itself that the consumer paid to the tax office.
It is not the tax itself that the business held on behalf of the consumer.
It is not the amount that the business pays directly to the tax office.

It only displays the fact that the transaction was concluded at that selling price and the breakdown of that tax-inclusive price.

From the receipt display, you cannot tell how much of the price was actually passed on.
You cannot tell how much the business will pay.
You cannot tell how much profit the business has left from that transaction.

Even so, many people recognize that they have paid 100 yen in tax by seeing the display 'Consumption tax included 100 yen'.

And they think that the business is just holding onto that 100 yen.

From this, the story of 'tax profit' is born, claiming that 'tax-exempt businesses that do not pay the tax they held are sneaky'.

However, the legal structure is different.
The consumer is not the taxpayer.
The 100 yen written on the receipt is part of the consideration for the sale.
The amount paid by the business is not the amount displayed on the receipt, but is determined by the difference between the sales tax amount and the purchase tax amount.
The receipt is not proof that the price was successfully passed on.
It is not proof that a deposit exists.
What is recorded there is,

'At that price, one transaction was concluded'

is the fact.

Words from 2012 and words from 2026

In 2012, Diet member Satsuki Katayama spoke about the reality of the market.
Can a local soba shop raise its price from 630 yen to 660 yen?
Are small and medium-sized enterprises really able to pass the consumption tax on to the price?
What does the consumption tax bring to businesses that cannot raise prices?
She was looking at what was happening on the ground, not the plan of the system.
14 years later.
Satsuki Katayama, who became Minister of Finance, speaks the words of those who protect the system.
The consumption tax is intended to be ultimately borne by the consumer through price pass-through.
The consumption tax equivalent amount is appropriately passed on to the price.

Two sets of words exist within the same person.

Words that look at the reality of the market.
Words that uphold the schedule of the system.
Why did Satsuki Katayama change her words?
Perhaps her way of thinking really did change.
Perhaps as Finance Minister, she must protect the tax system as a whole.
Perhaps the dynamics within the party or her relationship with the Ministry of Finance had an influence.

Or perhaps her essential understanding has not changed, and only the words she uses have changed depending on her position.

The answer to that is known only to her.
But one thing is certain.

The problem pointed out in 2012 has not been solved 14 years later.

There are businesses that cannot pass on the price.
Consumption tax is incurred even when there is a deficit.
Consumption tax arrears continue.
While saying that wage increases are necessary, the structure of taking consumption tax from the source of wage increases first is maintained.

And even now, the government explains the consumption tax as a "stable revenue source that is not easily affected by the economy."

However, the fact that it is not easily affected by the economy means, in other words, that they will continue to collect it even when the economy is bad.

Even if people's lives are difficult.
Even if corporate management is difficult.
Even if there is a deficit.
Even if cash flow is at its limit.
As long as added value remains, consumption tax is incurred.

Can we really call that "stable"?

This is a record of the incident.

14 years ago, Satsuki Katayama left a question.
And now, Hiroshi Ando has taken over that question.
Sitting on the side receiving the question was Satsuki Katayama, who had become Finance Minister.
The Satsuki Katayama of 2012 spoke of the reality of the market.
Finance Minister Katayama of 2026 spoke of the schedule of the system.
What changed was not the market.

It was the chair she sat in.

If you look at the market from outside the system, you can see businesses that cannot pass on the price.
If you look at the tax system from the top of the system, the explanation becomes that it is "scheduled to be passed on smoothly and appropriately."
The facts have not changed.
Depending on the position of observation, the words used have changed.

Those who sit at the top of the anomaly called the system are redefined as parts to protect that structure.

The more correct her words from 14 years ago were, the more the current response becomes proof that this country's politics chose the maintenance of the system over the reality of the market.

This is not a story that blames the change of heart of Satsuki Katayama alone.

If whoever sits in that chair is forced to say the same words, then the problem is not the individual, but the structure.
Therefore, she is not the only one who must face the question.

It is us ourselves who accept that change of heart as a "specification" of the system and continue to let the sound of the cash register pass by today.

Who exactly brought about the lost 30 years?

This is not just a problem for businesses.

It is not the case that all businesses will face a tax increase beyond the 30% special measure.
However, businesses moving to Type 4, Type 5, or Type 6 simplified tax systems, or those whose input tax deduction rate under the standard tax system falls below 70%, will face a higher tax burden than under the 30% special measure.
According to the Ministry of Finance model, that burden moves like this.
100,000 yen.
150,000 yen.
And, depending on the industry,
200,000 yen. 250,000 yen. 300,000 yen.
If the price can be passed on, the burden on business partners and consumers increases.
If the price cannot be passed on, the business owner's income, savings, capital investment, and living expenses are cut.

Whichever way it goes, it is not newly created added value.

Added value does not increase.
Only the tax burden increases.

Businesses that can no longer bear that burden will eventually disappear from the market.

What disappears is not the 'tax-exempt business' on the books.
It is the shops in town.
It is the local artisans.
It is the people who transport goods.
It is the writers, designers, engineers, photographers, cleaners, and outsourced staff who support corporate work from behind the scenes.
If suppliers disappear from the market, products, services, technology, employment, and consumer choices are also lost.

This is not just a story about who pays the consumption tax.

It is a story about who will be erased from the Japanese market.

Mio looked at the street.
Beyond the noren curtain, the shopkeeper was operating the payment terminal.
Unable to raise the price of the 630 yen (tax included) soba to 660 yen.
Before long, a small electronic sound rang out.
Beep.
Mio:
'Will taxes be raised further once the relief ends?'
Aoi:
'The more a business generates added value through the owner's own labor, the more likely that is.'

Mio:
'That's not relief.'

'They're just showing us the tax increase little by little!'

The 30% special measure is not the final destination.
Beyond that, the next stage for transitioning to standard taxation is waiting.

Many small business owners still do not know this fact.

If there are any sole proprietors or people running small companies around you who have registered for the invoice system, please share this article with them.

Before deciding whether to support it or oppose it, I want you to first know how your own tax burden will change from here on.

The timer is already running.
Beep.

That sound was, again today, the sound of cutting into someone's livelihood and erasing someone's business from the market.

[Popular Articles]

<Consumption Tax - Supply Chain Collapse>

*Please refer here for [63rd note money publication] Chapter 103: Consumption Tax - Supply Chain Collapse

<Consumption Tax - Silent Market Exclusion>

*Please refer here for [62nd note money publication] Chapter 102: Consumption Tax - Silent Market Exclusion -

<Consumption Tax - The Devil's Dilemma>

*Please refer here for [61st note money publication] Chapter 101: Consumption Tax - The Devil's Dilemma -

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*Please refer here for [60th note money publication] Chapter 100: Consumption Tax - She Knew Everything -

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*Please refer here for [59th note money publication] Chapter 99: Consumption Tax - And Only the Management Was Saved -

<Consumption Tax - The Official Cheat Called Relief Measures>

*Please refer here for [58th note money publication] Chapter 98: Consumption Tax - The Official Cheat Called Relief Measures

<Consumption Tax - Two Pains, One Tax Revenue>

*Please refer here for [57th note money publication] Chapter 97: Consumption Tax - Two Pains, One Tax Revenue

<Consumption Tax - The True Nature of Market Pressure>

*Please refer here for [56th note money publication] Chapter 96: Consumption Tax - The True Nature of Market Pressure

<Consumption Tax - Tax Hike Timer>

*Please refer here for [55th note money publication] Chapter 95: Consumption Tax - Tax Hike Timer

<Consumption Tax - Invoice - Mirror Tax Hike>

*Please refer here for [54th note money publication] Chapter 94: Consumption Tax - Invoice - Mirror Tax Hike

<Consumption Tax - The Register That Rings Twice>

*Please refer here for [53rd note money publication] Chapter 93: Consumption Tax - The Register That Rings Twice

<Consumption Tax - Grand Unified Theory>

* [52nd note Money Publication] Chapter 92: Consumption Tax - Grand Unified Theory, please refer here

<Pre-empting Value Added - The Two Katayamas>

* [Mio and Aoi] Chapter 91: Consumption Tax - Pre-empting Value Added - The Two Katayamas, please refer here

<The Calculation Formula Without Tax Gain - It Was Just a Tax Hike>

* [Mio and Aoi] Chapter 90: Consumption Tax - The Calculation Formula Without Tax Gain - It Was Just a Tax Hike, please refer here

<Consumption Tax - The Second Seal - Self-Negation of Consumption Tax>

* [51st note Money Publication] Chapter 89: Consumption Tax - The Second Seal - Self-Negation of Consumption Tax, please refer here

<<Popular Magazines>>

[Mio and Aoi] Consumption Tax Strange Tales

* What is consumption tax? Receipts, deposits, price shifting, export refunds, invoices--. Based on parliamentary replies and institutional structures, Mio and Aoi observe the mysteries of consumption tax and unravel its true name in this series.

[The Real Reason Japan Became Poor]

* Japan did not become poor due to a lack of effort. It is the accumulation of systems that have cut household take-home pay and consumption, and thinned out corporate sales and investment. Consumption tax, social insurance premiums, austerity, PB surplus, invoices. This is a magazine that deciphers them as a single economic structure.

[Nurturing the Soil.]

* This series is a story that connects everything from home gardening to national land regeneration through the single perspective of [Nurturing the Soil]. Weeds, fallen leaves, water, organic matter, abandoned land, forestry, regions--. Using stories of familiar gardens as an entrance, I write about the mechanisms by which soil supports people and regions in a practically usable form.

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