This paper was reported by Dr.Hirohisa Kitano, President of Japan Taxpayers Association ( JTA) at The 2007 Asia -Pacific Taxpayers Union Meeting (Oct.20-22 ), Shenzhen, China.
   This paper does express the philosophy of JTA movements.

1. World in the 21st Century is Society of Tax States
      "Tax State" means a state which mostly depends on taxes for its revenue. Socialist states appearing in the beginning of the 20th century including the Soviet Union as typical one were non-tax states. In the ending of the 20th century, most of such socialist states had collapsed. China is also in the process of transformation to a Tax State. I am forecasting that the world in the 21st century will develop centering on Tax States.
      The constitutional politics of a Tax State is essentially determined by how to collect taxes and how to use them. The Constitution of a Tax State can be defined as a code stipulating principles concerning how to collect taxes and how to use them. Our peace, welfare, human rights, etc. will be basically determined by such features of taxes.
      People's peace, welfare, human rights, etc. in the world of the 21st century will also be basically determined by how to collect taxes and how to use them. Accordingly, high regard should be paid to what nature and structure the taxes and their systems have in order to secure people's peace, welfare, human rights, etc, on a global basis.
   
   
2. Article 30 of the Constitution of Japan and Taxpayers' Fundamental Rights
      Article 30 of the Constitution of Japan stipulates "The people shall be liable to taxation as provided by law.". In brief, the Constitution of Japan is a" peace-welfare" constitution. The Constitution of Japan does not unconditionally or with no principle stipulate people's obligation to pay tax. The people are liable to pay taxes only on the basis of "law" conforming to the Constitution with respect to both how to collect taxes and how to use them. Conclusively speaking, under the Constitution of Japan, people have the status that they are obliged to pay taxes only in accordance with the Constitution, that is, under the "rule of law" requiring the principle of "ability to pay tax", on condition that taxes paid by them will be used in accordance with the Constitution, that is, based on the "rule of law" placing top priority on peace and welfare and to that extent. I call this status of people "Taxpayers' Fundamental Rights".
      The "Taxpayers Fundamental Rights" is a collective concept of various civil liberties, social human rights, etc. concerning taxpayers and constitutes concrete rights under the Constitution of Japan.
      To what extent Taxpayers Fundamental Rights have been materialized is the barometer of democracy and guarantee of the peace, welfare, human rights, etc. of people in each state.
      I think that the legal theory stated above of Japan holds good in terms of the international society in the 21st century which will be developed centering on Tax States, too. That is to say, peace, welfare, human rights, etc. in the international society of the 21st century will be determined by to what extent Taxpayers Fundamental Rights are materialized in respective states.
   
   
3. Principle of "Ability to Pay Tax" and Progressive Taxes
      In recent years, the tendency of flat taxes is prevalent in many states including Japan. Concretely speaking, poll taxes and proportional taxes, not progressive taxes, are on the prevalence. A theory presented for justification of the tendency of flat taxes is the principle of "benefit to pay tax". The principle of "benefit to pay tax" can be used by taxation authorities as a basis of imposition of taxes. But, from the standpoint of taxpayers, it is not just a principle of tax burden allotment. There is nothing but the principle of "ability to pay tax" and the principle of progressive taxes as that for allotment of tax burden among people. There is nothing but the principle of "ability to pay tax" and the principle of progressive taxes as that for substantive decision of taxes and tax systems. There exist no social-scientific or constitutional basis to justify the principle of "benefit to pay tax".
      The principle of "ability to pay tax" and the principle of progressive taxes are the expression and materialization of the thinking of social human rights, and originate in the constitutionalism which is the most important in present welfare states. They constitute part of the above-mentioned Taxpayers Fundamental Rights.
      I would like to here add some comment to the principle of "ability to pay tax". This principle holds good in terms of all sorts of taxes, national taxes or local taxes, direct taxes or indirect taxes, and individual taxes or corporate taxes. In the respect of the tax rate, it requires the adoption of progressive tax rates, not poll tax rates or proportional tax rates.
      In terms of the individual income tax, application of the principle of non-taxation to minimum living expenses is required. In terms of the property tax, application of the principle of non-taxation or light taxation (use value x low tax rate) on a certain range of property securing people's rights to live (the property: (a) a certain ranges of houses and house lots, (b) farmland and other assets actually in use for agriculture, (c) factories-offices and factory-office lots of small enterprises, (d) shares held by owners of small enterprises, and etc.).
      In terms of the consumption tax, adoption of the specific consumption tax capable of limiting items of objects to taxation and setting different exemption points, rates, payment methods, etc. by class of objects is required, rather than the general consumption tax covering all consumptions.
      Some economists argue that the progressive taxes do not match the corporate income tax. This argument is wrong. In present societies, corporations are legal entities distinguished from individual persons, independent social entities and independent social units. Respective corporations themselves constitute "units of taxation" to which the principle of "ability to pay tax" should be applied. I explain about the circumstances of Japan. With a majority of big corporations in Japan, ownership and management are separated and the ratio of shares held by individual shareholders is significantly low, accordingly, they have the substance near to" foundation" rather than "association", almost with no structure of "corporate income ultimately belongs to individual shareholders" referred to as a basis for non-suitability of the progressive taxes to corporations. On the other hand, with a majority of small and medium-sized corporations accounting for more than 99% of corporate enterprises, although having the legal personality, there is no separation between ownership and management, and those corporations are covered by the right to live of their owner shareholders. Application of the progressive taxes is desirable in order to protect the right to live of such smaller corporations, too. Because, under the progressive taxes, those corporations become objects of low tax rates leading to their vitalization.
      As another basis of the argument that the progressive taxes do not match the corporate income tax is presented the phenomenon of the corporate income tax's transformation to the sales tax or indirect tax in substance. However, the issue of shifting and incidence of taxation is an issue of the economic process, with no need of being considered in terms of theories of tax system. In addition, shifting and incidence of taxation is not an issue unique to corporations because individual income taxes imposed on personal enterprises are capable of shifting. Accordingly, the theory of shifting of the corporate income tax does not justify flat taxes. The issue of shifting and incidence of taxation by big enterprises should be coped with by obligating them to open their costs to the public, etc. .
      Often appear arguments to justify flat taxes by pointing out the importance of horizontal equity. Concerning this issue, I think social-scientifically and constitutionally as follows. "Horizontal equity can be achieved only by thorough application of the principle of 'ability to pay tax,' that is, thorough adoption of progressive taxes based on the theory of vertical equity." It should be noted that the system of universal flat taxes violates the constitutionalism of welfare states and injures the right to live, one of social human rights of socially weak people.

Additional items

1. Our opinion is especially from a view point of Constitutional legal theory. Flat taxes disregard and infringe Social fundamental human rights. The principle of non-taxation to minimum living expenses etc. are from only the principle of "ability to pay tax". The principle of "benefit to pay tax " is not just a principle of tax burden allotment. We have to impose the high rate progressive taxes to high income persons , rich persons, Big companies , and besides , We have to use tax revenue to handicapped persons ,low income persons, Small businesses etc.. We think, Horizontal equity can be achieved only by the thorough application of the principle of "ability to pay tax ," namely progressive taxes, Vertical equity. Finally say, Vertical equity is just equity.
   
   
2. If we did reduce the many special tax treatments ( tax preferences ), and If we did impose the high rate taxes before introducing the general consumption tax (VAT) to Rich persons and Big companies. then, We could receive 22 trillion Japanese yen tax revenue. We do not need to raise the general consumption tax rate.