Press translations [Japan]. Economic Series 0158, 1946-01-13.

Full Translation:

Those who have liability of tax are the individuals who are dwelling with their properties for more than a year in the locality where the law takes effect at the time of the assessment of the property.

Those who are dwelling for more than a year in the locality where the law takes effect will be taxed on the whole increased amount of their properties, and those who do not have their dwellings in the locality where the law takes effect but have their properties in this locality will be taxed only once.

Assessment of the increased amount of property:

• 1.The Increased amount of property is the surplus amount of property held by individuals on or before the termination of the war, as compared with the amount of property held on 1 April 1940.
• 2.If there is any decrease in the property of the head of a family or that of other members of his family, this decreased amount will be met with the increased amount of property in the same family.
• 3.The property will be estimated, and the debt will be exempt from taxation, both according to the property tax law.

Donations:

• 1.In case there is a donation of property in a certain time from the beginning of a fixed period, this donated amount of property will be regarded as a part of the receiver's property held at the beginning of the period and will be taxed accordingly.
• 2.In case there is a donation of property or a contribution within a fixed period before the assessment of property, both the donor and the receiver will be taxed according to the property tax law, irrespective of their contributory activities.

The following amounts of property will be specially exempted from taxation:

• 1.The amount equivalent to such earned income as the retirement pay which was paid off before the beginning of a fixed period; 2. A certain amount of specified deposits and savings; 3. The amount equivalent to the temporary pension and allowances received for death and casualties suffered in the war; 4. Ten thousand yen for every war casualty family; 5. Other amounts to be covered by the ordinance.

ECONOMIC SERIES: 158 (Continued)

ITEM 1 (Continued)

Basic reduction:

• 1.The basic redaction in the increased amount of property will be made to the extent of about ten thousand yen.
• 2.The basic reduction will be made in the total increased amount of properties of members of one family.

Classification of the increased amount of property will be made as follows:

• 1.The increased amount of property, with special and basic reductions, will be divided into two categories, the first category and the second category.
• 2.The increased amount of property belonging to the first category will be taxed heavily.
• 3.The second category is to be the surplus amount of property belonging to the first amount, and this second categorical amount will be taxed at the lower rate of taxation. Exemptions amounting to about 50 thousand yen will be made for the second categorical amount of property.
• 4.In case the estimated amount of lands and houses which have been owned throughout a fixed period exceeds the amount fixed by the Finance Minister, this surplus amount will be taxed as the increased amount of property belonging to the second category.

The taxation rate of the property increase tax is as follows:

• 1.As for the first categorical amount of increased property—the amount less than 10 thousand yen....60%; the amount more than 10 thousand yen....80%; the amount more than 30 thousand yen....100%.

As for the second category, the amount less than 10 thousand yen....10%; the amount more than 10 thousand yen....20%; the amount more than 30 thousand yen....30%.

Collection of taxes:

• 1.The Individual property increase tax as a principle will be levied at one time throughout this rear.
• 2.In a special case, the tax payment in kind and the deferment of tax payment will be permitted according to the property tax law.
• 3.The estimated decision and the advanced, tax levy will be made possible according to the property increase law.

Procedures such as reports on property, decisions, investigations, etc. will be decided in accordance with the property tax law. The chief of the Taxation Bureau will be empowered to conduct investigations on the taxation problems and at the same time to inflict severe punishment on tax evaders.

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ECONOMIC SERIES: 158 (Continued)

Summary:

In case one's property is divided into the hands of other person, either by donation or by contribution before assessment, both the giver and the receiver shall be taxed on this divided property. This will be in addition to their own properties, so as to prevent illegal distribution of properties as well as the evasion of taxes.

The amount of tax-free properties to be allowed for an individual will be decided in accordance with the living standard of every individual. Special deposits and savings will be exempted from taxation to the extent of 20 per cent. War victims will be exempted from taxation to the extent of ten thousand yen for every family. The exemptions are fixed at 20 thousand yen.

The taxation on religious organizations and organizations for public welfare will be limited to their basic properties at a 10 per cent taxation rate. Such public organizations as schools, libraries, and chapels are to be exempted from taxation. The estimate of all property will be based upon the current price at the date of the assessment. The tax will be collected at one time throughout 1946, and payment will be in money or bonds. In case of need, payment in kind will be accepted.

In special cases, the tax deferment will be permitted for not more than four years and for not more than two years for organizations. Tax evaders will be fined three times as much as the amount evaded, or will be imprisoned for about three years.

A property increase tax will be levied on an increased amount (during a fixed period) of the entire property of the family. If there is an inheritance or a donation during this period, both the inheritor and the donor shall be taxed respectively. Special exemptions will be made for retirement pay and other items. Basic exemptions will be fixed at about 10,000 yen.

Two classifications will be made in property increases. The first, is the surplus amount of present property as compared to the property held by the same person at the beginning of the above mentioned fixed period, with due consideration to the price increase ratio during this period. The second is the increased amount of the property over the first surplus amount.

The total net profit of the corporation, of which dividends and bonuses are exempted, will be taxed to the extent of 100 per cent. Consequently, the whole increased amount of reserve funds for this period will be taken away by this tax.

Summary:

The main object of imposing the property tax is not only to counteract inflation but also to assist in the democratization of JAPAN by dealing a heavy blow to the wealthy class, beginning with such big ZAIBATSU as the MITSUI and the MITSUBISHI. The capitalists and

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ECONOMIC SERIES: 158 (Continued)

ITEM 3 (Continued)

millionaires are greatly perturbed by these actions of the Government, and are trying every means of escape. The Finance Ministry has already warned against this kind of evasion, but in view of the fact that many people are attempting to avoid the tax somehow or other, the authorities concerned have made a special statement recently concerning this. They said that grave offenses would be punished by penal servitude. The following remarks will be a good lesson to those who might attempt to avoid the tax.

As a means of evading the tax, one might try to reduce one's property below the standard of taxation, by dividing the property among the members of one's family or friends. But the former is useless because the tax will be imposed upon the joint holdings of the entire family, and the latter will be easily discovered by the inspectors, because one has to draw out the money from the bank or the trust company.

It will be quite a difficult task for anyone to try to reduce his property below the standard of taxation. For instance, if he tries to reduce a million yen below the standard, he has to divide it among 40 or 50 friends. Even if he could do it, it will easily be detected by inspection of bank pass-books.

If the property is donated to public societies, shrines, and temples, the tax will be imposed upon those who accepted the donation and not on the donor.

Stamps also will be put upon the bank-notes, the deposit pass-books, debentures, and share-certificates on presentation to the agencies concerned, and those which have no stamps will be useless. Therefore 100 million yen without stamps upon them will be valueless. Some people are trying to avoid the tax by buying things, but if the things bought consist of merchandise, they will be taxable, and if they are clothing, furnitures or utensils, there is a natural limit to the amount which can be purchased. In order to present such practices many measures are under consideration.

Information about such offenders will be welcomed. More over, the inspection committees will be organized from among the people, and with their co-operation the taxation office will make a thoroughgoing search of each house suspected of trying to evade the tax. As for the punishment, a fine amounting to several times the sum of the tax will be imposed upon the offenders. Consistent offenders will be liable to penal servitude.

IKEDA, chief of the Taxation Bureau (SHUZEI KYOKUCHO), made the following comment concerning the important points of the tax. The scope of taxation will be exturded to every Japanese citizen who has property. The taxable items will be cash, deposits, savings, real estates, lands, farms, forests, curios, and goods bought with the special intention of avoiding the tax. As a rule furniture, utensils, clothing and necessary goods will be exempt from taxation, but if it is evident that these goods were bought for the purpose of evading the tax, no mercy will be shown toward the offenders. The evaluation of the property will be made jointly by the Finance Ministry and the committees appointed from among the people. Special consideration will be given to savings and deposits, with a 20 per cent reduction made from the total amount. The rest will be taxed.

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ECONOMIC SERIES: 158 (Continued)

ITEM 3 (Continued)

Disabled ex-servicemen and war casualties will receive, special treatment. The tax will be collected once this year, and will be paid in cash. But if cash is not available, certain other articles will serve the purpose. The postponement of tax payment will be permitted only in special cases. In the case of an individual the maximum period of postponement will be four years, but interest on it for that period must be paid.

DISTRIBUTION "X"

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