Surprisingly little known! What is the resident tax?
Housing in Japan
This time, I would like to talk about the resident tax.
If you are reading this, what is the resident tax and what is it used for? I am sure you would like to know.
So let me help.
The resident tax…
The resident tax refers to two types of taxes levied on residents by first, the prefecture they live in and second, their city, town or village. Residents here means not only individuals but also businesses. Therefore, the resident tax consists of an individual residence tax and a corporate residence tax. Both these taxes are calculated as a percentage of either the individual income (the national income tax) or the corporate income.
(Naohiko Jinno, Professor, Graduate School of Economics, The University of Tokyo/ 2007)
How is the tax levied?
There are two ways the resident tax is collected: special collection and normal collection. Let me explain each one briefly.
Special collection: This refers to the payment of the resident tax to the city, etc. by the payroll manager of each business after deducting it from the employee’s monthly salary.
Normal collection: This refers to using the order for payment sent by each city, etc. to the residents and paying the resident tax by oneself. Some cities, etc. allow credit card payments, so if your city is among them, you can pay your tax and get some points on your credit card at the same time.
However, employers have a duty to collect the resident tax via the special collection method from all employees, as stipulated in the Local Tax Law (Article 321 Section 4). In response to the “Individual Resident Tax Special Collection Promotion Declaration” issued by the National Local Tax Council in 2014, each city, etc. decided to adopt the method of special collection starting with government-ordinance-designated cities, etc.
How is the tax used?
In the case of Tokyo, this tax is used for national debt service expenditure and tax-related expenses. This is the amortization fund for Tokyo bonds or the money paid to the wards, towns and so on. Next, the money is also used for welfare and health such as support for the elderly and childcare support and education and culture, which includes education and school expenses, public libraries and so on. Finally, the resident tax money is used for the maintenance of the city, the police, the fire department and other things necessary for the life of the residents.
In each municipality, it may be used for the construction and maintenance of roads, local services, garbage collection expenses, maintenance of public facilities. The percentage of money used for health and welfare appears to be high in most municipalities.
As you can see the resident tax is used to improve our daily lives.
[Message from the author]
I hope you found this information helpful.
It seems that the tax we pay is put to good use.
By the way, do you know what happens if you default on your resident tax?
In the worst case, legal proceedings will be brought to seize your salary and property.
Make sure you pay your taxes!