[59th note money publication] Chapter 99: Consumption Tax—And Only the Management Was Saved—
Chapter 99: Consumption Tax—And Only the Management Was Saved—
[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] where those operating the system themselves admitted in the public forum of the Diet that [in a liberal economy, prices are not cleanly passed on].
Satsuki Katayama left behind a question, which Hiroshi Ando took over, and I want you to see the moment he finally led it to a [conclusion].
—The 'Management's Tax Gain' created by the 30% special measure and 70% deduction—
Mio was watching a video of Finance Minister Satsuki Katayama.
On the screen, the explanation regarding the transitional measures for the invoice system continues.
The 20% special measure becomes a 30% special measure.
The 80% deduction becomes a 70% deduction.
Consideration for small businesses.
A grace period to adapt to the system.
In other words, it was a 'relief measure' for invoices.
Mio stopped the video.
Mio:
"Hey, Aoi."
Aoi:
"What?"
Mio:
"Who is being saved?"
Aoi:
"To investigate that, we first have to look at 'what is being used as the standard for calling it relief'"
Relief measures
At the House of Councillors Committee on Financial Affairs on March 24, 2026, Finance Minister Katayama explained that the review of the 20% special measure and 80% deduction was a measure to "gradually, gradually ease" into the system after hearing requests from small businesses and commerce and industry associations.
And she continued as follows.
Transitional measures for the smooth introduction of the invoice system
Instead of eliminating special exceptions all at once, they will be phased out gradually.
From the perspective of the system, it is certainly a "consideration" and a "relief" measure.
However, let's apply those relief measures back to the calculation of value-added tax.
Then, something strange appears.
The usual three people
The transaction proceeds as follows.
A is a taxable business operator. Sells to B for 4 million yen
B is a tax-exempt business operator. Sells to C for 5.5 million yen
C is a taxable business operator. Sells to consumers for 6.6 million yen
All prices include tax, and the tax rate is 10%.
The value added by B is,
5.5 million yen - 4 million yen = 1.5 million yen
The value added by C is,
6.6 million yen - 5.5 million yen = 1.1 million yen
First, let's look at the normal calculation where C can deduct the full amount of purchase tax.
C's sales tax amount is,
6.6 million yen × 10/110 = 600,000 yen
The purchase tax amount is,
5.5 million yen × 10/110 = 500,000 yen
Therefore, C's tax payment amount is,
600,000 yen - 500,000 yen = 100,000 yen
When this 100,000 yen is returned to the tax-inclusive value added,
100,000 yen × 110 / 10 = 1,100,000 yen
It matches exactly the value added that C actually created.
This is the basic structure of a value-added tax, where the tax from the previous stage is removed through input tax credit, and one pays only the tax corresponding to the value added that one has created.
Mio:
"The value added created by C is 1.1 million yen. The tax payment amount is also 100,000 yen, which corresponds to 1.1 million yen. That's normal."
Aoi:
"Yeah. Up to this point, anyway."
70% deduction
Suppose B does not register for an invoice, and C uses the 70% deduction.
The amount C can deduct is,
500,000 yen × 70% = 350,000 yen
Therefore, C's tax payment amount is,
600,000 yen - 350,000 yen = 250,000 yen
The tax payment amount, which was 100,000 yen, becomes 250,000 yen.
We return this to the tax-inclusive effective tax base in the same way as before.
250,000 yen × 110 / 10 = 2,750,000 yen
The value added that C actually created is 1.1 million yen.
However, the tax payment amount due to the 70% deduction becomes the same magnitude as taxing 2.75 million yen of value added.
C's calculation
Full deduction
Actual value added: 1.1 million yen
Tax paid: 100,000 yen
Effective tax base: 1.1 million yen
70% deduction
Actual value added: 1.1 million yen
Tax paid: 250,000 yen
Effective tax base: 2.75 million yen
The value added remains at 1.1 million yen.
Yet, with a 70% deduction, only the effective tax base increases from
1.1 million yen → 2.75 million yen
to this amount.
The value added has not increased.
Sales have not increased.
Profits have not increased.
Even so, C's effective tax base alone explodes from 1.1 million yen to 2.75 million yen.
That is 2.5 times.
Mio:
“But the original tax base for value-added tax is 1.1 million yen, right?”
Aoi:
“With a 70% deduction, the effective tax base calculated backward from the tax paid becomes 2.75 million yen.”
Mio:
“C hasn't generated 2.75 million yen in value added!”
Where did the 1.65 million yen come from?
If you break down the increased effective tax base, you can see its true nature.
2.75 million yen = 1.1 million yen + 1.65 million yen
1.1 million yen is the value added actually generated by C.
The remaining 1.65 million yen is,
5.5 million yen × 30% = 1.65 million yen
the 30% of purchases from B for which a deduction was not allowed.
In other words, the 70% deduction does not just tax C's value-added of 1.1 million yen.
It causes 1.65 million yen of B's 5.5 million yen in sales to reappear as C's effective tax base.
Mio:
“The previous business's sales are being resurrected as the next business's value-added!”
Aoi:
“That's because the portion that couldn't be deducted is added onto C's tax payment.”
Mio:
“Even though it's a value-added tax, you're taxing someone else's sales all over again!”
The 30% special provision and the 70% deduction were two sides of the same coin.
Next, let's look at the case where B registers for the invoice system and chooses the 30% special provision.
B's sales tax amount is,
5.5 million yen × 10/110 = 500,000 yen
B's tax payment amount under the 30% special provision is,
500,000 yen × 30% = 150,000 yen
If B registers, C can deduct the full 500,000 yen, so C's tax payment remains 100,000 yen.
Therefore, the combined tax payment of B and C is,
B: 150,000 yen + C: 100,000 yen = 250,000 yen
Now, what happens if B does not register and C uses the 70% deduction?
B: 0 yen + C: 250,000 yen = 250,000 yen
It is the same.
Calculation of C
Full deduction
Actual value added: 1.1 million yen
Tax payment amount: 100,000 yen
Effective tax base: 1.1 million yen
70% deduction
Actual value added: 1.1 million yen
Tax payment amount: 250,000 yen
Effective tax base: 2.75 million yen
The value added remains at 1.1 million yen.
Yet, the effective tax base increases from
1.1 million yen → 2.75 million yen
to this amount.
Who pays in B's choice
If B registers and chooses the 30% special provision
B's payment: 150,000 yen
C's payment: 100,000 yen
Total of B + C: 250,000 yen
If B remains tax-exempt and C uses the 70% deduction
B's payment: 0 yen
C's payment: 250,000 yen
Total of B + C: 250,000 yen
Who pays changes.
However, the total paid by B + C does not change.
The 30% special provision and the 70% deduction appear to be separate relief measures.
However, in this model, they are mirror-image calculations.
If B registers, B pays 150,000 yen.
If B does not register, C's tax burden increases by 150,000 yen.
Who pays changes.
However, the total amount entering the management's coffers remains the same.
Mio:
"Isn't relief supposed to mean eliminating the burden?"
Aoi:
"In this calculation, you can only choose which business operator bears the burden."
Mio:
"It's not a lifeboat. It's a selection screen for who pays!"
The Ministry of Finance's 28%
Here, I will overlay the average model presented by the Ministry of Finance itself in the Diet.
On February 26, 2019, at the House of Representatives Committee on Financial Affairs, the Ministry of Finance explained that it had estimated the revenue increase from the introduction of the invoice system by assuming the average taxable sales of tax-exempt businesses to be approximately 5.5 million yen and the value-added rate to be approximately 28%.
If the value-added rate is 28%, the purchase rate on the other side is roughly 72%.
100% - 28% = 72%
However, the 30% special provision is calculated by paying 30% of the sales tax amount.
This is the same calculation structure as assuming purchases are 70% and value-added is 30%.
Deemed value-added rate under the system = 30%
The actual value-added rate in the Ministry of Finance's model is 28%.
The rate created by the 30% special provision/70% deduction is 30%.
The difference is 2%.
Mio:
"Who created that 2% of value-added?"
Aoi:
"No one created it."
Mio:
"Then, where did it come from?"
Aoi:
"The system created it."
Management creating its own added value
We calculate the Ministry of Finance's figures directly based on the taxable sales amount from the same document.
The actual added value is,
5.5 million yen × 28% = 1.54 million yen
The effective tax base set by the 30% special provision is,
5.5 million yen × 30% = 1.65 million yen
The difference is,
1.65 million yen - 1.54 million yen = 110,000 yen
At a 10% tax rate, that is approximately 11,000 yen per business operator.
If we apply this mechanically to the approximately 1.61 million businesses that the Ministry of Finance anticipated would convert to taxable status in 2019,
5.5 million yen × 1.61 million businesses × 2% × 10% = approximately 17.7 billion yen
Of course, this is not the current actual amount.
It is a nationwide thought experiment using the old policy estimate of approximately 1.61 million businesses, assuming that the same 28% to 30% difference occurs for everyone.
Even so, the 2% difference created by the system amounts to tens of billions of yen when expanded nationwide.
Mio: "Treating someone who only generated 1.5 million yen in added value as having generated 1.65 million yen."
Aoi: "Under the Ministry of Finance's strict 28% model, 1.54 million yen is treated as 1.65 million yen."
Mio: "And then, they tax that difference as well."
Aoi: "A tax base created beyond the original added value. That excess becomes an increase in national tax revenue."
Mio:
"Isn't that the management's tax windfall!"
Anomaly | Management's Tax Windfall
"Tax windfall" is a term typically used in criticism, referring to a situation where a portion of the tax amount supposedly borne by consumers remains in the hands of businesses due to tax exemption systems or simplified calculations.
The "management's tax windfall" referred to here is not a legal term.
It is an analytical term used by Sanraku to indicate the excess generated when the system sets an effective tax base of 30% against an actual value-added rate of 28%.
Correct the business's tax windfall.
The system introduced for that purpose creates value-added that no one actually produced, and collects tax revenue from it.
Mio:
"While saying they're correcting the business's tax windfall, the management is the one creating a tax windfall!"
Aoi:
"It's a tax base multiplication bug."
Mio:
"It's not a bug! It's a calculation according to the system!"
The nature of deposits, and missing again
Returning to the entire rounding model.
The tax equivalent included in the 6.6 million yen paid by the final consumer is,
6.6 million yen × 10/110 = 600,000 yen
When B uses the 30% special provision, the amount entering the national treasury is,
A's payment: 4 million yen × 10/110 = approx. 363,600 yen
B's payment: 150,000 yen
C's payment: 100,000 yen
Total,
approx. 613,600 yen
Even in the case where B remains tax-exempt and C uses the 70% deduction,
A's payment: approx. 363,600 yen
B's payment: 0 yen
C's payment: 250,000 yen
In total,
approx. 613,600 yen
The tax equivalent amount considered to be borne by the consumer is 600,000 yen.
The total amount entering the national treasury due to the system is approx. 613,600 yen.
The difference is approx. 13,600 yen.
This corresponds to the 150,000 yen excess tax base generated by the rounding model.
150,000 yen × 10/110 = approx. 13,600 yen
Mio:
"Where did the 'deposit-like nature' go?"
Aoi:
"It's missing."
Mio:
"Again!?"
If it exceeds the amount considered to be deposited by the consumer, from whom was that excess amount collected?
There is no answer.
Business gross profit, wages, investment, or the consumer burden after price hikes.
One has no choice but to cut somewhere in the market to pay it.
The reference point for relief is at the bottom of the cliff.
Why does this look like a 'relief measure'?
This is because the reference point for the system side is not set to the time before the invoice system was introduced, but to the final form where no input tax credit is allowed at all.
If we list C's tax payment amounts, it looks like this.
How does C's tax payment amount change?
State where full deduction was possible
C's tax payment amount: 100,000 yen
70% deduction
C's tax payment amount: 250,000 yen
Zero deduction
C's tax payment amount: 600,000 yen
From the system's perspective,
It was going to be 600,000 yen, but we kept it to 250,000 yen. Therefore, it is a relief.
From the market's perspective,
It was 100,000 yen, but we increased it to 250,000 yen. Therefore, it is a tax hike.
Even with the same 250,000 yen, the meaning reverses if you change the reference point.
Mio: "Are they calling it a rescue just because they caught someone on a branch halfway down after pushing them off a cliff!?"
Aoi:
"From the system's perspective, I suppose it's a rescue because they shortened the fall distance."
Mio: "Don't push them off the cliff in the first place!"
Schedule created by the management
According to the National Tax Agency's FY2026 Tax Reform Special Feature, the deduction ratio for taxable purchases from tax-exempt businesses, etc., will in principle be 70% starting from the taxable period beginning on or after October 1, 2026, and will subsequently be reduced in stages to 50%, 30%, and 0%.
The 30% special provision can be selected by individual business owners who meet certain requirements for their 2027 and 2028 tax returns.
In the Ministry of Finance's average model, the figure corresponding to the actual purchase rate is approximately 72%.
The system's deduction rate will drop from 80% to 70%.
The moment it hits 70%, it falls below the 72% purchase rate of the Ministry of Finance model.
Thus, a systemic 30% appears, exceeding the actual value-added rate of 28%.
Mio:
"Soon, the management will receive the tax profit, won't they?"
Aoi:
"According to the schedule created by the management, that is the case."
Mio:
"The management looks pretty pleased with themselves!"
Aoi:
"If you look at the national mechanical calculation of the Ministry of Finance model, the difference is in the tens of billions of yen."
And so, only the management was saved.
The video was still paused.
On the screen, there is the figure of Finance Minister Katayama explaining the "transitional measures."
The 30% special exception.
The 70% deduction.
Consideration for small-scale businesses.
A relief measure to gradually ease them into the system.
However, when you follow the calculations to the end, the burden has not disappeared.
If B registers, B pays.
If B does not register, C pays.
If C passes it on to the price, the consumer pays.
If it cannot be passed on, C's profits decrease.
Wages, outsourcing costs, hiring, and capital investment may be cut.
The burden moves through the market.
However, only the management's share does not disappear.
The relief measures certainly saved someone.
It was not B.
It was not C either.
It was not the workers.
It was not the consumers either.
And so, only the management was saved.
Mio closed the video.
She looked out the window.
Delivery trucks are driving through the city in the afternoon.
A small restaurant is putting out its sign before opening.
The sound of machinery can be heard from a workshop.
In the back of a shop, the owner was staring at an invoice.
No one had created 2% more added value.
No one had more breathing room than yesterday.
It was just that, on the system's ledger, 28% became 30%.
1.1 million yen became 2.75 million yen.
And to pay that difference, somewhere in the city is being whittled away, little by little.
Mio:
"What about the citizens?"
Aoi:
"Everyone has become poor."
Somewhere in the city, a cash register rang.
Beep.
That sound was, once again today, the sound of eroding someone's business.
Notes on Calculations
The A, B, and C models in this text are simplified models where all transactions are subject to a standard 10% tax rate, prices include tax, and purchases are originally fully deductible. A is the starting point of the model, and no purchases prior to that are considered.
The "effective tax base" in this text is an analytical figure derived by dividing the tax amount paid by 10/110, and is not the "tax base" itself under the Consumption Tax Act.
The 30% special measure is optional. For businesses whose actual purchase ratio exceeds 70%, general taxation may result in a lower tax payment.
"Management's tax gain" is not a legal term, but a tentative name used in this analysis to refer to the effective tax base that arises beyond actual value-added, and the corresponding tax revenue.
The approximately 17.7 billion yen figure is a mechanical estimate based on the average taxable sales of 5.5 million yen, a value-added ratio of 28%, and approximately 1.61 million businesses expected to convert to taxable status, as presented by the Ministry of Finance in 2019; it is not a current actual figure or an official government estimate.
Reference Materials
"The management cheats."
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 grows silently.
Moreover, the officials
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,the opponent will find it difficult to recognize this effect as a "tax hike."
True Name
An anomaly where officials rewrite the rules
and implement specifications that only allow them to win.
Weakness
Visualization of the structure
Mathematical formulation of the tax base
The question of "what can no longer be deducted"
The report goes to the management
Who determines that this system is unfair?
Who corrects the cumulative taxation caused by the deduction cutoff?
Who overturns the explanation that 'it is not a tax increase'?
The ones who made the rules are the management.
The ones who receive the tax revenue are also the management.
The ones who explain the system are the management.
The ones who receive complaints are the management.
And the final arbiter is also the management.
Mio:
"Where do we report it?"
Aoi:
"To the management."
Mio:
"Who makes the ruling?"
Aoi:
"The management."
Mio:
"Who receives the tax revenue?"
Aoi:
"The management."
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 management cheats.
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 raise a question.
Because you cannot raise a question, 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 cash register sound rang out at some shop.
Beep.
Once again today, 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 simple purchase.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 takes over the question left behind by Satsuki Katayama
Reference Video:
[She knew everything.]
[Confession from the system side, and checking the answers 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 the full amount can be passed on to the price.
Just because the consumption tax rate has risen does not mean the selling price can be raised by that amount.
Even if the price cannot be passed on, 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 will bear the tax cost.
2012.
A politician pointed out its dangers in the National Diet.
It was lawmaker 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.
During her time in the opposition party, lawmaker Satsuki Katayama strongly warned about the impact of a consumption tax hike on the economy.
Housing.
Regional 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.
Lawmaker 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.
Right now, the soba shop serves soba for 630 yen including tax, but can they make it 660 yen?
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, “Since the tax rate has gone up, you should just pass that on to the price”?
At the time, lawmaker 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 tax arrears, is 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 lawmaker 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 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,' 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 tax that consumers should pay and keep it as profit without paying it to the state.
Legally, tax gain does not exist.
Here, the story 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 premises are required.
All business operators must be able to fully 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 profits, there should be no business operators who cannot pay consumption tax and end up in financial distress.
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 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 is incurred 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 the point that, unlike corporate tax, profit is not calculated by subtracting all expenses from sales.
Even for necessary business expenditures such as salaries, social insurance premiums, and interest payments, there are some that are not eligible for the purchase tax credit.
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 continues to sell products purchased for 100 yen for 50 yen every time cannot survive.
A manufacturing industry that continues to use 100 yen worth of raw materials and sell the product 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 in the red.
As long as the business is generating added value, it is a structure where consumption tax is incurred even in the red.
Pre-emption of 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
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 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 decided 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, 'I am told to pay the consumption tax before I 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.'
The '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 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 received from the consumer.
It is not the amount that the business pays directly to the tax office.
It is merely the fact that the transaction was concluded at that price, and the breakdown of that tax-inclusive price is displayed.
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 had 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 gain' is born, where 'tax-exempt businesses that do not pay the tax they held onto 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 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, a single 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 someone on the side of protecting the system.
The consumption tax is intended to be ultimately borne by the consumer through the passing on of the price.
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 plans of the system.
Why did Satsuki Katayama change her words?
Perhaps her way of thinking really has changed.
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 even 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."
But the fact that it is not easily affected by the economy means, in other words, that they will continue to take it even when the economy is bad.
Even if people's lives are difficult.
Even if corporate management is difficult.
Even in 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.
The Finance Minister Katayama of 2026 spoke of the plans of the system.
It was not the market that changed.
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 "planned 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 answer becomes proof that this country's politics chose the maintenance of the system over the reality of the market.
This is not a story blaming the change of Satsuki Katayama alone.
If anyone who 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 as a "specification" of the system and 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.
Beyond the 30% special measure, not all businesses will face a tax increase.
However, businesses moving to Class 4, 5, or 6 simplified taxation, or those under standard taxation where the input tax deduction rate 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 630 yen (tax included) soba to 660 yen.
Before long, a small electronic sound rang out.
Beep.
Mio:
'Once the relief ends, will taxes be raised even further?'
Aoi:
'The more a business generates added value through the owner's own labor, the more likely that is.'
Mio:
'That's not relief.'
'Aren't you 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 normal taxation awaits.
Many small businesses still do not know this fact.
If there are 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 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 today, too, was the sound of cutting into someone's livelihood and erasing someone's business from the market.
[Popular Articles]
<Consumption Tax—Supply Chain Collapse>
*Refer here for [63rd note Money Publication] Chapter 103: Consumption Tax—Supply Chain Collapse—
<Consumption Tax—Quiet Market Exclusion>
* [62nd note money publication] Chapter 102: Consumption Tax—Quiet Market Exclusion—can be found here
<Consumption Tax—The Devil's Choice>
* [61st note money publication] Chapter 101: Consumption Tax—The Devil's Choice—can be found here
<Consumption Tax—She Knew Everything>
* [60th note money publication] Chapter 100: Consumption Tax—She Knew Everything—can be found here
<Consumption Tax—And Only the Management Was Saved—>
* [59th note money publication] Chapter 99: Consumption Tax—And Only the Management Was Saved—can be found here
<Consumption Tax—The Official Cheat Called Relief Measures>
* [58th note money publication] Chapter 98: Consumption Tax—The Official Cheat Called Relief Measures can be found here
<Consumption Tax—Two Pains, One Tax Revenue>
* [57th note money publication] Chapter 97: Consumption Tax—Two Pains, One Tax Revenue can be found here
<Consumption Tax—The True Nature of Market Pressure>
* [56th note money publication] Chapter 96: Consumption Tax—The True Nature of Market Pressure can be found here
<Consumption Tax—Tax Hike Timer>
* [55th note money publication] Chapter 95: Consumption Tax—Tax Hike Timer can be found here
<Consumption Tax—Invoice—Mirror Tax Hike>
* [54th note money publication] Chapter 94: Consumption Tax—Invoice—Mirror Tax Hike can be found here
<Consumption Tax—The Register That Rings Twice>
* [53rd note money publication] Chapter 93: Consumption Tax—The Register That Rings Twice can be found here
<Consumption Tax—Grand Unified Theory>
* [52nd note Money Publication] Chapter 92: Consumption Tax—The Grand Unified Theory—please refer here
<Preempting Value Added—The Two Katayamas>
* [Mio and Aoi] Chapter 91: Consumption Tax—Preempting 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—The Self-Negation of Consumption Tax>
* [51st note Money Publication] Chapter 89: Consumption Tax—The Second Seal—The 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 Diet deliberations and the institutional structure, Mio and Aoi observe the mysteries of the 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 result of a 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 familiar garden stories as an entry point, I write about how soil supports people and regions in a way that can actually be used.
#CreativeAward2026
#EntertainmentOriginalWorkCategory
#StartedWithAI
#Gemini
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