[63rd note money publication] Chapter 103: Consumption Tax - Supply Chain Collapse -

Chapter 103: Consumption Tax - Supply Chain Collapse -

[She knew everything.]

[The system's confession and the answer 14 years in the making]

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

Transactions with tax-exempt businesses that lead to deficits due to 50% deduction

When I turned off the room lights, only the monitor on the desk stood out in white.

On the screen, Finance Minister Satsuki Katayama is answering questions.

Changing the 20% special measure of the invoice system to a 30% special measure.

Changing the 80% deduction allowed for purchases from tax-exempt businesses to a 70% deduction.

Based on the requests of small-scale businesses and commercial and industrial organizations, the burden will be "gradually smoothed out."

They say it is a transitional measure to introduce the system smoothly.

Mio stopped the video.

Mio:
"Aoi. What comes after the 70% deduction?"

Aoi:
"50%, 30%, and then zero deduction."

A schedule was displayed on the side of the screen.

Mio stared at the last characters.

Mio:
"They aren't smoothing out the burden."

"They are gradually reshaping the market into one where you can't do business with tax-exempt entities."

Someone's purchase is someone else's sales

The basic calculation of consumption tax is not difficult.

Businesses subtract the tax amount on purchases from the tax amount on sales.

This input tax credit prevents the tax from being repeatedly layered onto transactions at previous stages.

There is something that must not be forgotten here.

Someone's purchase is always someone else's sale.

C's purchase is B's sale.

B's purchase is A's sale.

The market is not a collection of unrelated numbers.

Someone's sales and someone's purchases are connected like a chain.

Mio:
"So, what about the input tax credit?"

Aoi:
"It is also a mechanism to exclude sales from the previous stage from the tax base of the next business operator."

What happens if that chain is broken by the presence or absence of an invoice?

Let's look at the transactions of A, B, and C.

Let's set up a simple model where everything is tax-inclusive and the tax rate is 10%.

Assume C chooses standard taxation and has no other expenses eligible for input tax credit.

The sales tax amount included in C's tax-inclusive sales of 6.6 million yen is,

The tax equivalent amount corresponding to the tax-inclusive purchase of 5.5 million yen from B is,

If full deduction is possible, C's tax payment amount is,

The amount newly added by C is,

10% of that is,

C only pays tax corresponding to the 1.1 million yen in value-added that they created themselves.

This is the state where the purchase tax credit is working.

If a tax-exempt business enters the middle, the chain is broken

B purchases from A for 4 million yen and sells to C for 5.5 million yen.

The amount newly added by B is,

However, B is a tax-exempt business and cannot issue an invoice.

Therefore, as the transitional measures shrink, C becomes unable to deduct the 500,000 yen corresponding to the 5.5 million yen.

In the complete state with zero deduction, C's tax payment amount is,

This is an increase of 500,000 yen from the 100,000 yen at the time of full deduction.

However, the value-added created by C themselves remains 1.1 million yen.

It is not that their work has increased.

It is not that sales have increased.

It is not that profits have increased.

Only the sales from the previous stage that can no longer be deducted are entering C's tax calculation.

When viewed on an "effective tax base" calculated by reversing the tax amount from the tax-inclusive base of 10/110, it looks like this.

Breaking down the 6.6 million yen with zero deduction,

Mio's finger stopped at the final 4 million yen.

Mio:
"Wait. Isn't it just the 1.5 million yen that B hasn't paid tax on?"

Aoi:
"No. Even the 4 million yen in sales from A, which was B's purchase, reappears in C's effective tax base."

Mio:
"But A's sales were already subject to tax at the A stage!"

The content of the additional 500,000 yen burden

The tax amount corresponding to A's 4 million yen in sales is,

The tax amount corresponding to the 1.5 million yen newly added by B is,

Adding them together,

The 500,000 yen that C cannot deduct is not just the 136,000 yen corresponding to the part newly created by B.

It also includes the 364,000 yen corresponding to the sales that were already subject to tax at the A stage.

What is happening here is not merely 'filling the gap for unpaid taxes by tax-exempt businesses'.

Because company B, which does not have an invoice, is inserted in the middle, sales from stages prior to B also become non-deductible at the downstream stage of C.

Since the previous stage tax cannot be deducted, taxation accumulates across transaction stages.

Mio:
'On top of the tax, the tax burden piles up again...'

Aoi:
'Economically speaking, it is a structure that can be called Tax on Tax, or cascading taxation.'

Mio:
'Is the invoice system one where if you incorporate tax-exempt businesses into the supply chain, the tax base flows backward into the past?'

Aoi:
'From the point where the chain of deduction is broken, the upstream sales settle into the downstream burden.'

With a 50% deduction, profits disappear

Now, let's compare this additional burden with corporate profits.

C's sales excluding tax are 6 million yen.

Assuming a profit margin of 3.5% for the core business, the profit without the additional burden from the invoice would be,

The 3.5% mentioned here is not an official average common to all small and medium-sized enterprises nationwide.

It is a hypothetical assumption for explanation, assuming small and micro enterprises with low profit margins.

Also, the 'amount remaining as profit' and 'real profit margin' below are not formal accounting items.

It is a model for looking at business profitability, where sales and expenses are kept constant, and the additional consumption tax burden compared to full deduction is subtracted from the core business profit of 210,000 yen.

Full deduction

80% deduction

At this point, 47.6% of the original profit disappears.

70% deduction

71.4% of the original profit disappears, and the profit margin drops to 1%.

50% deduction

The additional burden of 250,000 yen exceeds the core business profit of 210,000 yen.

At this point, C falls into a deficit.

30% deduction

The additional burden is about 1.67 times the core business profit.

After losing all profit, they dig a deficit of 140,000 yen.

Zero deduction

The additional burden is about 2.38 times the core business profit.

After losing all profit, they dig a deficit of 290,000 yen.

Mio looked at the numbers twice.

Mio:
"If the deduction becomes zero, a company that was making a 3.5% profit in its core business ends up at minus 4.83%?"

Aoi:
"That's an 8.33 percentage point deterioration from the full deduction time."

Mio:
"A business model that incorporates tax-exempt businesses just can't work!"

An 80% deduction is no longer peaceful.

With an 80% deduction, C still has 110,000 yen in profit remaining.

On the surface, the transaction can continue.

However, out of the original 210,000 yen profit, nearly half, 100,000 yen, has already vanished.

With a 70% deduction, the remaining profit is 60,000 yen.

More than 70% of the original profit is lost.

If a business owner thinks rationally, the following options emerge.

• Demand a price reduction from B

• Demand invoice registration from B

• Switch to another business operator who can issue invoices

• Bring that procurement in-house

This does not happen because business owners are cold-hearted.

It happens because the system rewrites the balance sheet such that simply continuing the transaction causes one's own profits to disappear.

Mio:
"Beyond a 50% deduction, it cannot be absorbed through kindness or personal relationships."

Aoi:
"Yeah. Continuing the transaction becomes an order to incur a loss for one's own company."

Approximately 60% of Japanese companies are already in the red.

According to the National Tax Agency's FY2024 'Company Sample Survey,' loss-making corporations accounted for 60.3% of the total.

About 60% of corporations have no margin of profit to absorb additional burdens in the first place.

The remaining 40% or so of profitable corporations are not all high-profit enterprises either.

For small and medium-sized enterprises continuing operations with profit margins of a few percent, a burden increase of 100,000, 150,000, or 250,000 yen is not a rounding error.

It is wages.

It is equipment renewal costs.

It is working capital.

It is the source of funds for loan repayment.

And it is the very time during which a business can continue.

Mio:
"A company in the red has no capacity to protect tax-exempt businesses."

Aoi:
"That is why exclusion begins not with ideology, but with the profit and loss statement."

No one says they will "exclude" anyone.

The ordering party does not dislike tax-exempt businesses.

The quality of work has not dropped.

Deadlines have not been missed.

Long-standing trust has not vanished.

It is just that the accounting staff does the math.

With an 80% deduction, the profit is 110,000 yen.

With a 70% deduction, it is 60,000 yen.

With a 50% deduction, it is a loss of 40,000 yen.

Seeing those numbers, the manager requests quotes from registered businesses.

A tax-exempt business might not even receive a notice of termination of business.

The next order simply stops coming.

Mio:
"It looks as if the market excluded them on its own."

Aoi:
"It is the market that excludes. But it was the management that designed the market's balance sheet to exclude."

Become a taxable business or exit the market

Mio traced the numbers on the monitor with her finger.

Plus 3.5%.

Plus 1.83%.

Plus 1.00%.

And, minus 0.67%.

Mio:
"After the 50% deduction, business models that incorporate tax-exempt businesses into the supply chain will collapse."

Aoi:
"Exactly. That is why B2B tax-exempt businesses are forced to choose between becoming taxable businesses or exiting the market."

Mio:
"If they become taxable businesses, they will pay taxes from their own living expenses."

Aoi:
"If they do not register, they will be removed from the market as entities that worsen the profits and losses of their business partners."

Mio:
"Whichever they choose, their livelihood will be eroded."

Aoi nodded quietly.

Mio:
"That is the true face of the invoice system..."

Beyond the "relief"

On the screen, the 30% special measure and the 70% deduction were explained as considerations for small-scale businesses.

However, the 30% special measure is a provision that sets the tax payment ratio for registered sole proprietors at 30%.

The 70% deduction is the stage where buyers who purchase from unregistered businesses can only deduct 30% of the tax amount equivalent.

Although the names are similar, they are different systems.

On one hand, it gradually increases the burden on those who have registered.

On the other hand, the burden on buyers who transact with non-registered entities will be increased little by little.

Even if you register, your burden increases.

Even if you do not register, the burden on your business partners increases.

The two transitional measures squeeze tax-exempt businesses from different directions.

Mio:
It's not a cushion.

Aoi:
It's a device to adjust the speed so that the market doesn't collapse all at once until the system is complete.

Mio:
So it's not stopping the collapse, but smoothing out the speed of the collapse.

Beep.

Mio was walking through the city at night.

A small construction firm.

A workshop for a sole proprietor with a sign hanging out.

A printing shop run by a family.

A small factory lined with old machines.

The work that comes from there creates sales for other companies.

Someone's purchase is someone else's sale.

That chain supports people's lives.

However, a different calculation had begun within the ledgers.

With invoice number.

Without invoice number.

Can be deducted.

It cannot be deducted.

It becomes a surplus.

It becomes a deficit.

It is not about the quality of the work.

It is not about the price either.

It is not about long-standing trust either.

The presence or absence of a number selects who can remain in the supply chain.

At a nearby store, a customer who finished paying held up their card.

Beep.

Mio turned around at that sound.

That is not the sound of tax collected from consumers flowing cleanly to the government.

It might be the sound of a business partner's profit disappearing.

It might be the sound of the next order shifting to a registered business operator.

It might be the sound of a long-standing supply chain quietly breaking.

Beep.

That sound was, again today, the sound of whittling away someone's business.

Regarding the calculation conditions and terms in this chapter

• All amounts are tax-inclusive, simplified with a tax rate of 10%.

• C is a taxable business operator using the general tax calculation method. Under simplified tax calculation, the tax payment amount is not calculated directly based on whether individual suppliers are invoice-registered, so the calculations in this chapter do not apply as is.

• The 4 million yen for A is not 'A's own value-added of 4 million yen,' but rather sales that have already become subject to tax at the A stage. A's actual tax payment amount varies depending on A's own purchase tax credit.

• The "effective tax base" is a conceptual term used for explanation, calculated by back-calculating the tax amount paid at 10/110, and is not the formal legal name for the tax base.

• In this chapter, "Tax on Tax" refers not only to the narrow sense of adding the tax itself to the legal tax base, but also to the broad sense of the cascade effect where, due to the inability to deduct input tax, upstream sales that have already been taxed are embedded into downstream prices, leading to a cumulative tax burden.

• The 3.5% profit margin is a hypothetical figure for explanation and is not presented as the average value for all small and medium-sized enterprises.

Reference Materials

• National Tax Agency, "About the Invoice System"

• National Tax Agency, "FY2026 Tax Reform and the Invoice System"

• Ministry of Finance, "Outline of the FY2026 Tax Reform"

• National Tax Agency, "FY2024 Company Sample Survey Results"

• OECD, Consumption Tax Trends 2024

• European Commission, How does VAT work?

"The management is cheating."

SSR [Apparition 017 | Official Cheat]

Rarity: SSR
Attribute: System/Darkness/Management
Species: System-Implementation Type Apparition
Danger Level: ★★★★★★★★★★★★★★★
Unique Ability:
<<Rule Alteration>>
<<Deduction Chain Severance>>
<<Tax Base Inflation>>
<<Internalization of Reporting Destination>>

Flavor Text

When the authorities 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 grows silently.
Moreover, the authorities
call this "optimization."

Effect Description

When this card enters the field,
partially negate the "deductions" on the opponent's field.
The negated deductions
are added directlyto the tax base.
Furthermore, as long as this card exists,it becomes difficult for the opponent to recognize this effect as a "tax increase."

True Name

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

Weakness

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

Report to 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 it?"

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 realizing it, a system is created.
Livelihoods are whittled away.
Businesses are whittled away.
Even so, you don't know what is happening.
Because you don't know, you cannot ask the question.
Because you cannot ask the question, you cannot oppose it, nor can you change it.
And even if you notice that 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. Somewhere in a shop, a register beeped.

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

Beep.That sound was—

the sound of someone being whittled away again today.

[14 years later, checking the answer] Hiroshi Ando took over the question left behind by Satsuki Katayama

Reference video:

[She knew everything.]

[Confession from the system side, and checking the answer 14 years later]

From here on, I will intentionally repeat myself.
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 the danger 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 stand at the pinnacle of that system.

In 2012, she knew everything

"It will become something that can no longer be handled."
2012.
During her time in 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 we easily tell shops that might lose customers by raising prices, "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 percent 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, was consumption tax.

In other words, she knew.

The consumption tax is explained as being "intended to be passed on to the price."

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 after that.
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.
Under the Consumption Tax Act, the person liable for tax payment 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 consumption tax payment.
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" (ekizei), 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 the persons liable for tax payment under the Consumption Tax Act.
Therefore, there is no legal structure where business operators hold taxes that consumers should pay and keep them as profit without paying them to the state.
Legally, tax gain does not exist.
At this point, the long-told narrative of consumption tax begins to waver.

The illusion of complete pass-through

Many people understand consumption tax as follows.
First, there is the cost.
A reasonable profit is added to that.
Then, a 10% consumption tax is added on top of that.
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 completely add the consumption tax equivalent to the price after securing 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 profit, there should be no business operators who run into financial trouble 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 selling prices even if raw material costs rise.

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

It is an expectation set in place to make the system work.

Why consumption tax occurs even when in the red

The amount of consumption tax payment 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 subject to tax credit for purchases.
Therefore, even if there is a loss in terms of corporate tax profit,

Taxable Sales − Taxable Purchases > 0

then consumption tax will be incurred.
Whether a business is in the red or in 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 the products they purchase before selling them.
A business that keeps selling products purchased for 100 yen for 50 yen cannot survive.
A manufacturing industry that keeps using 100 yen worth of raw materials and selling products for 50 yen cannot 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 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

What is obtained by subtracting taxable purchases from taxable sales 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 perceived as,

Added Value
≒
Profit + Personnel Expenses

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

is the result.
What is happening here?

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 operator.

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 can take the funds for wage increases,' 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 remainder.
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 1100 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 imposed on that transaction, and it is part of the consideration for the transfer 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 operator held on behalf of the consumer.
It is not the amount that the business operator pays directly to the tax office.

It only indicates 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 operator will pay.
You cannot tell how much profit the business operator 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 operator is just holding onto that 100 yen.

From this, the story of 'tax benefit' is born, where 'tax-exempt businesses that do not pay the tax they held are cunning'.

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 operator is not determined by the amount displayed on the receipt, but 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 the local soba shop raise 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 business operators who 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 the passing on to the price.
The consumption tax equivalent amount is appropriately passed on to the price.

Within the same person, two sets of words exist.

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

Or perhaps, while her essential understanding remains unchanged, 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 even 14 years later.

There are businesses that cannot pass on price increases.
Consumption tax is incurred even when operating at a loss.
Consumption tax arrears continue to accumulate.
While claiming 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 consumption tax as a "stable source of revenue 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 will be incurred.

Can we really call that "stable"?

This is a record of the incident.

14 years ago, Satsuki Katayama left a question behind.
And now, Hiroshi Ando has taken over that question.
Sitting on the side receiving the question was Satsuki Katayama, who had become Minister of Finance.
The Satsuki Katayama of 2012 spoke of the reality of the market.
The Finance Minister Satsuki Katayama of 2026 spoke of the plans 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 price increases.
If you look at the tax system from the top of the system, the explanation becomes that it is "planned to be passed on smoothly and appropriately."
It is not that the facts have changed.
The words used changed depending on the position of observation.

Those who sit at the top of the monstrosity that is the system are redefined as parts to protect its structure.

The more correct her words from 14 years ago were, the more the current response serves as proof that this country's politics has chosen 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 anyone who sits in that chair is forced to say the same words, then the problem lies in the structure, not the individual.
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 us by today.

Who exactly is responsible for bringing about the lost 30 years?

This is not just a problem for businesses.

Beyond the 30% special measure, not all businesses will face a tax increase.
However, businesses moving to Type 4, 5, or 6 simplified tax systems, or those under the standard tax system with an input tax deduction rate 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 cost can be passed on, the burden on business partners and consumers increases.
If the cost 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, jobs, and consumer choices are also lost.

This is not just a matter of who pays the consumption tax.

It is a matter of who is being erased from the Japanese market.

Mio looked at the street.
Beyond the noren curtain, the shop owner 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 hike little by little!'

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

Many small businesses still do not know this fact.

If there are any sole proprietors or small business owners 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 someone's livelihood being cut and someone's business being erased from the market.

[Popular Articles]

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<Pre-empting Value Added - The Two Katayamas>

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

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

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<<Popular Magazines>>

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* Japan did not become poor due to a lack of effort. It is the result of an 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 magazine deciphers them as a single economic structure.

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