What I Want to Achieve as Prime Minister Kono Taro-4Digital Safety Net

During the COVID-19 pandemic, the UK was able to identify people in need and provide timely support. This was possible because the government in the UK could access income information in near real-time. On the other hand, in Japan, the only income data available to the government came from the previous year’s tax returns or payment records, making it difficult to identify people currently struggling due to a sudden drop in income.

To address this issue, we aim to establish a digital safety net that will enable us to accurately identify those in need and provide timely, proactive support.

Firstly, every time income, such as salary, is generated, we will require companies to submit income-related data, which is currently submitted separately to the National Tax Agency, local governments, and the Japan Pension Service, to a single national digital platform. This platform will link data from the tax office, pension service, municipalities, and other relevant agencies that need tax and insurance information.

This system will allow the government to quickly access income data, enabling targeted, proactive support for those in need.

In addition to quickly assisting those in need, the digital safety net will have other significant benefits, such as increasing transparency regarding one’s taxes and simplifying procedures.

By consolidating each individual’s income, insurance premiums, income taxes, and local taxes under their My Number, they will be able to view their income and tax information at a glance through the My Number Portal. Furthermore, this information will be automatically entered into the e-TAX and eLTAX systems, so that income, insurance premiums, medical expenses, and donations eligible for deductions will be automatically calculated, and tax amounts and refunds will be processed automatically.

While individuals will still need to manually enter expenses related to miscellaneous income, which are currently entered manually in tax returns, all other entries and calculations will be automated, allowing individuals to file their tax returns with minimal effort by simply reviewing the information and clicking a button.

Initially, this system will significantly reduce the burden for those currently filing tax returns. In the future, we aim to abolish the year-end tax adjustment process, making it easy for all income earners to file simple tax returns.

This may seem surprising, but the current year-end tax adjustment process, in which wage earners submit deduction-related documents to their employers, who then send these documents to the tax office, social insurance office, Hello Work, labor standards inspection office, and local tax departments, will be simplified. Each individual will be able to confirm the information with a single click on the My Number Portal.

This will not increase the burden on wage earners, and it will significantly reduce administrative costs for businesses.

For the tax office, everything will be processed digitally, greatly reducing their workload as well.

Additionally, once this system is in place, local taxes, such as the resident tax, will be determined based on the current year’s income, eliminating situations where individuals are unable to pay taxes due to a significant decrease in income compared to the previous year.

By having everyone with an income file tax returns, people will become more aware of the amount of taxes and social insurance premiums they are paying, and it is hoped that they will also scrutinize how these funds are being used.

To achieve this, we will need to upgrade the National Tax Agency’s system, link the relevant agencies, and ask companies to modify their systems to submit salary information digitally. This will not happen next year or the year after, but we are committed to steadily moving forward toward this future.

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