Consumption Tax Delinquency: Businesses’ Unauthorized Use for Other Purposes Is Unacceptable

Editorial

16:09 JST, December 28, 2025

Consumption tax delinquency has been on the rise. If this tax, which is the closest to the people, is not paid properly, that undermines the principle of fairness regarding taxes. The central government needs to increase its collection efforts and deal with delinquent payers strictly.

Last fiscal year, the amount of newly incurred consumption tax delinquencies reached ¥529.8 billion, up ¥91.5 billion from the previous fiscal year. The figure has shown an upward trend since the tax rate was raised to 10% in 2019. Consumption tax delinquency accounted for more than half of all national tax delinquencies, including income and corporate taxes, in fiscal 2024.

The amount of consumption tax that the central government ultimately gave up on collecting, for reasons such as insufficient assets, totaled ¥29.2 billion last fiscal year.

Under the consumption tax system, consumers pay the tax, which is added to the prices of goods and services, and businesses remit that tax on behalf of consumers.

Businesses only hold the consumption tax collected from customers temporarily, but there have been a series of cases in which some businesses have frequently diverted this money for operating capital or other purposes. This could be considered embezzlement and is utterly unacceptable.

The consumption tax, which is borne widely by members of the public and various entities, serves as crucial funding that supports the nation’s social security system. National revenue from the consumption tax reached ¥25 trillion last fiscal year, surpassing income tax and corporate tax.

To maintain fairness and credibility in taxes, the central government must deal strictly with delinquent businesses, to prevent them from gaining benefits by evading their obligations. The government should rigorously urge delinquent payers to remit the tax, and if payment is not made, it should thoroughly investigate assets and seize them.

Businesses with low tax liabilities are supposed to pay the consumption tax in a single lump sum once a year. This is intended to ease the administrative burden on such businesses, but this system, in which businesses hold on to the consumption tax money for longer periods of time, might instead encourage them to misappropriate the tax if they develop cash flow problems.

There is also a system under which businesses can accumulate tax funds in a registered account for withdrawal on a specified date, so they do not need to prepare money for tax payments all at once. However, only a limited number of businesses have used this system. It is hoped that the central government will publicize it thoroughly to ensure taxes are paid.

This delinquency problem is not limited to businesses. The Tokyo metropolitan government failed to pay consumption tax for such matters as the leasing of parking spaces for 21 years through fiscal 2022.

Among its tax arrears, the metropolitan government paid about ¥120 million for the period from fiscal 2019 to fiscal 2022, including delinquent tax, but it did not have to pay for earlier periods due to the statute of limitations. The delinquencies have reportedly been attributed to a misunderstanding by employees in charge of this work, but the metropolitan government can be said to bear a grave responsibility as a local government that handles public funds.

The central government’s measures, including its efforts to deal with rising prices, require massive budgets, but there are currently no prospects for securing funds. When considering alternative funding sources, it is important to make efforts to secure tax revenue by first ensuring the collection of existing taxes.

 (From The Yomiuri Shimbun, Dec. 28, 2025)