Exercise greater ingenuity to expand use of digital methods to pay taxes

The Yomiuri Shimbun

14:15 JST, June 21, 2021

The central and local governments have accelerated their efforts to make tax payments cashless. Measures appropriate to the current situation are needed to prevent a hasty shift from causing confusion.

Cashless transactions are made through such means as internet banking services and credit cards, and are already allowed for tax payments.

Smartphone payment apps, such as PayPay and Line Pay, have also been used increasingly to pay local taxes, including automobile and fixed asset taxes. From next year, such apps could be used to pay income and other national taxes.

When paying taxes via smartphone, people are directed to a payment page on the screen by scanning a barcode printed on their tax payment notices, enabling them to pay their taxes at home and elsewhere. Taxpayers pay a fee when using credit cards, but the government said there would be no such charge for smartphone tax payments.

Such payment methods save people the time and effort of visiting a financial institution or a convenience store to pay their taxes. It is understandable that the government wants to enhance convenience and the tax payment rate by increasing the range of payment options.

Cashless payments account for about 30% of total consumer payments in Japan. This figure is lower than in Western countries. The government has set a goal of raising this to 40% by 2025. It apparently intends to use the cashless payment of taxes to boost such transactions overall.

Cashless tax payments are also expected to help local governments and financial institutions reduce their workforce and costs.

However, consideration should still be shown to people who are accustomed to paying taxes in cash at financial institutions or having funds withdrawn electronically from their bank accounts. About 70% of payments have been made in cash for national taxes, compared to about 40% for local taxes.

According to a survey conducted by entities such as the Japanese Bankers Association, many respondents said they shy away from cashless payments, citing such reasons as the burdensome operation and procedures, and a lack of certainty that they actually paid their taxes.

The option of paying taxes in person needs to remain available for people who cannot use digital devices well. Efforts first need to be made to help people understand the cashless tax payment system.

Establishing a system that taxpayers can use easily and find convenient is likely to help promote cashless payments.

Even if people pay local taxes in cash at financial institutions, the use of QR codes on their tax payment notices can be effective because their data can be sent to their local government electronically, making the tasks more efficient. The central government is considering including both barcodes and QR codes on tax payment notices.

The central and local governments, as well as businesses, are urged to deepen their cooperation and exercise ingenuity.

— The original Japanese article appeared in The Yomiuri Shimbun on June 21, 2021.