Top �� What's up around the Prime Minister �� June, 2002

Report of the Tax Commission Friday, June 14, 2002 Prime Minister Junichiro Koizumi received a report on the basic policy of tax reform from Chairman Hiromitsu Ishi of the Government Tax Commission at the Prime Minister's Official Residence Entitled "Basic Policy Toward Creating a Desirable Tax System," the report was adopted that morning at the general meeting of the Tax Commission. The report stresses the urgent need for reform in order to revitalize the Japanese society and economy, in response to changes in the social and economic structure, such as the declining birth rate and aging society, globalization, and computerization. Furthermore, in addition to the basic principles of "fairness, neutrality and simplicity," the report includes the premises that: (1) the tax system not hinder free choice by individuals or corporations and be neutral vis-a-vis economic activity; (2) costs shared by society be broadly and fairly distributed and that the tax system be easy to understand and simple; (3) there is a need to create a stable structure of revenues in order to dispel any concerns about fiscal soundness and to this end there is no way to avoid increasing taxation burden levels; and (4) local government administration and finances be made more efficient, a firm foundation of tax revenues centering upon independent financial resources will be established for local governments. Prime Minister Koizumi again directed the Commission to give prompt consideration to priority items toward tax reform for the next fiscal year.