Press translations [Japan]. Economic Series 0165, 1946-01-15.

Summary:

While the Japanese Government, faced with a large number of financial as well as economic problems pressing for immediate solution, is now taking various anti-inflation measures such as the establishment of the new tax law, the redemption of state bonds, and the stabilization of the budget, a certain keen atmosphere is pervailing industrial circles in connection with these measures. The wartime profit tax is now attracting the keenest attention.

Under this new tax system, both corporations and individuals are to be taxed on the wartime increase of properties held on the date of property investigation (possibly June, 1946) over properties held in April l940. The rate of tax will be 100 per cent for corporations and 60 to 100 per cent for individuals on property belonging to the first category and 10 to 30 per cent on property belonging to the second category.

Although a 100 per cent reduction will be made in the individual property increase tax in accordance with the general price level, there still remains the question of whether the assessing of properties should be based on market value or on purchased value. And there is the same question with regard to the assessment of property held by corporations: whether it should be based on the market value or on the book value.

On the other hand, the corporation property tax will be levied on the properties of corporations after deducting the obligations on the corporation and their paid-up capital or investments. The individual property tax will be levied on the properties of individuals at progressive rates from 10 to 70 per cent. This tax will be levied after deducting 20 thousand yen for property (30 thousand yen for air-raid damaged property) and two thousand yen for each member of a family.

However, the question of the entent to which this basic reduction of 20 thousand yen for individual property will be put into effect is now arousing great concern, in view of its importance in the future distribution of property. And at the same time, the fact that fine art objects will be taxed, while ready cash such as pensions and lottery prizes are exempt from taxation, is worthy of attention.

As may be seen from the above, however drastic the government's steps for taxation may be, industrial circles are quite anxious about the result.

The following are a few of their worries: (1) Although the redistribution of wealth will be realized to some extent by the equalization of property, there is a very fair possibility of the disorganization of industry and the reappearnace of inflation before long. (2) In view of the close connection between economy and finance, the anti-inflation

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measures will fail, without immediate industrial reconstruction; and (3) These steps will deal a fatal blow to former war industries which have held on to their properties, thereby bringing about a nationwide industrial depression.

Thus, it can be said that future industrial reconstruction depends upon the result of this new tanation system.

Summary:

In considering the current food crisis various authorities have been studying the output of rice for the 1945 fiscal year. This investigation was completed recently and the desperately low figure of 39,160,000 koku was arrived at. This is the worst crop since 1903 and is 66.9 per cent of the output in 1944 and of the last five years.

According to the detailed figures for each area, HOKKAIDO and AOMORI, where there was severe damage due to cold weather, had the worst crops in the whole country with only a 40 per cent yield of ordinary rice. Next, were the SHIKOKU and KYUSHU Districts, particularly the TOKUSHIMA, KAGAWA, MIYAZAKI and NAGASAKI Districts, with about 50 per cent harvest. The other districts generally had about a 70 per cent harvest.

These catastrophic figures are generally due to the poor growth of rice plants which was greatly effected by the unseasonable climate during the last year. Moreover, the KYUSHU, SHIKOKU and CHUGOKU Areas have been damaged by typhoons several times since September of 1945. The fundamental reason, however, was the lack of fertilizer. If there had been a supply of fertilizer, last year's rice output would have been much higher, according to agricultural authorities. In order to increase rice production this year to alleviate the food crisis, it is absolutely necessary to increase the production of fertilizer.

Summary:

Since the end of the last year the Price Section of the Finance Ministry has been contemplating the plan of establishing a new price system and of a new price control, and its definite plan will shortly be put under discussion at the cabinet meeting. The whole cabinet is now about to take up drastic measures for the stabilization of prices.

According to this plan, standard living expenses will be calculated based upon the price of such staple foods as rice and wheat. Based on these standard living expenses, standard wages will be set up, and based on these standard wages a reasonable price of coal will be fixed. Finally all other prices will be adjusted on the basis of these three standards.

Strict control must be exerted over basic livelihood, materials, and at the same time, as far as possible, the frame of price control on those articles which are comparatively unnecessary for living is to be removed.

Thus we may expect that as a first step, increased distribution of staple foods and a big cut in the price of fresh food will be carried [illegible]through.

Establishment of New Price System and Cutline of New Control Policy

Standard of new price system: (1) In order to establish a stronger control on rice and wheat, government control shall be enforced not only on their price but also on their compulsory delivery. (2) The

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producing power[illegible]r JAPAN'S postwar industry is remarkably lowered, and under the present circumstance both staple foods and fresh foods are obviously inadequate to support its 80 million people. In view of this fact expense of the lowest standard of living should be calculated and on this basis standard wages should be fixed. According to a recent investigation made on the living expenses of railway men, living expenses for a family of four amounts to 400 yen, and for family of seven, to 800 yen. (3) Not withstanding the raise in price of coal of the end of last year, the coal mine industry is now in bad condition due to the raise in mine laborers' wages and the increase of freight rates on coal. An increase of government subsidy is in urgent demand. In consideration of the importance of coal as a basic material, utmost effort should be made in the nationalization of coal industry and in fixing the most reasonable price for coal.

Establishment of new price system: (1) In setting up of controled price for principal foods, such as wheat, sweet potatoes, beans prices of fresh food shall be lowered to at least 50 per cont of the current market price in order to keep the equilibrium between the price of fresh food and the price of rice. (2) In basic material for production, such as steel, cement and fertilizer, powerful price control shall be inforced on after a strict cost accounting based on the new standard price of coal. (3) On necessities of life new prices shall be fixed and strictly enforced regardless of the resent official price. The official prices of those materials other than necessities of life shall be abolished and loft to the free market. (4) As to such public enterprises as Electric Power, Gas, Railway and Ship Transportation, strict control shall be exercised. (5) In order to solve the question of a big difference in house rent between newly built houses and the old ones, special measures shall be prepared for enabling a pooling account of the rent of new and old house. (6) In order to reform the present unwholesome and unhealthy dealings such as the black market to a wholesome state, measure shall be taken in solidifying the unions of street stores and allow them a strong self control on the one hand, and take up positive measures to support the restoration of general commercial trade on the other.

Essential points of price control: (1) As the bureaucratic control operated heretofore was too full of paper plans without actualities and bureaucratic self-righteousness, future control shall be made chiefly by dealers agreements on prices and an authorized price system. (2) The official price shall be cut down as much as possible. (3) Price control shall be operated more quickly. (4) Self control shall be solidified while excessive profiteering shall be more strictly supervised. (5) Provincial control shall be developed paying much attention to the specific conditions of each province.

Establishment of a price equilibrium system: (1) A price equilibrium fund system shall be established in which such revenues as the profit from the sale of the new cigarettes, "Peace" end "Corona" (2,500,000,000 - 2,600,000,000 yen) shall be applied to compensation for price difference. This sort of price equilibrium fund system had been obtaining excellent results in MANCHUKUO. (2) For this purpose special account relating to price shall be set up.

DISTRIBUTION "X"

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