Elderly
may be given choice between pension, tax exemption
Japan Today April
17, 2003
TOKYO
— Finance Minister Masajuro Shiokawa said Wednesday the government
should consider adopting a system that would give high-income elderly
people the choice of receiving basic public pension benefits or an
exemption of the same amount for inheritance tax.
Shiokawa
unveiled his idea at a news conference after a meeting of the government's
key economic panel, the Council on Economic and Fiscal Policy, which
discussed measures to curb the public burden in social security earlier in
the day.
Shiokawa,
who did not give a clear definition of high income, said he proposed the
idea as his own, not that of the Finance Ministry, to the meeting of the
panel over which Prime Minister Junichiro Koizumi presides.
Shiokawa
said the tax exemption can be an incentive, and the amount should be equal
to the benefits that high-income elderly people forgo.
Shiokawa
also told the meeting that it will be impossible to maintain the social
security system under the current framework when the government burden on
the system increases by around 1 trillion yen per year.
At
the panel meeting, private-sector members proposed a pension reform plan
for fiscal 2004 aimed at curbing the potential public burden to around
50%, economic and fiscal policy minister Heizo Takenaka said at a separate
news conference.
All
council members basically agreed with the direction of their proposal, but
opinions differed on a number of points and more discussion is needed,
Takenaka said.
The
potential public burden, which is the ratio of taxes, social insurance
premiums and fiscal deficit to national income, stayed at 47% in fiscal
2001.
But
it is expected to climb to 61% in 2025 unless the current pension system
is amended to accommodate the impact of rapid graying of the national
population as well as increases in pension payments and medical expenses,
according to an estimate of the Cabinet Office.
Shiokawa
told reporters he proposed that the government adopt a so-called Sweden
formula under which the basic public pension ensures the minimum level of
life, which he said is equivalent to the levels of households that receive
public assistance.
"But
I suggested the government need not provide pensions to people with high
incomes if they opt not to receive them," he said. "The
government then should consider offering them incentives in other
forms."
Shiokawa
also said he told other members of the meeting that he wants them to fully
review the pension system as a whole, adding the government must address
the issue either by raising premiums or cutting benefits.
"I
believe it will be difficult to have the government coffers cover
increases in pension and medical expenditures, which are expected to
increase by 8 trillion in 2010," he said.
Private-sector
members argued that it is necessary to restrain the amount of pension
payments, while increasing premiums as soon as possible.
After
the premium rates and taxation rates are fixed, a new framework for
adjusting pension payments should be introduced based on a clear rule,
they said in a proposal.
In
addition, the proposal calls for taxes on pension payments, which are now
basically free of taxation, saying that elderly people should also bear
burdens in accordance with their economic ability.
On
the basic pension, the proposal in effect says housewives who are
currently exempt from payments of social insurance premiums should pay them.
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