The Special Corporate Tax for Reconstruction began to be levied in April 2012 and was levied for only two years, until 2014—the originally planned three-year period being suddenly truncated to two years (out of the goodness of the Diet's heart?) The Special Income Tax for Reconstruction began to be levied at the start of 2013. Both taxes were and are for the purpose of securing sufficient resources for the reconstruction work in those areas affected by the 2011 Great East Japan Earthquake and tsunami. Unlike the two-year corporate tax, the personal income tax is to be levied until 2037 - that's 25 years! Companies: winners, individual taxpayers: losers.
The Special Income Tax for Reconstruction is levied on all income tax paid in Japan, whether the taxpayer is a permanent resident of Japan or not.
However, for non-Japanese residents who qualify for a tax deduction for taxes paid overseas, the Special Income Tax for Reconstruction is levied based on income tax for that person's pre-deduction earnings - such earnings including money earned in Japan, money earned overseas that was paid in Japan, and earnings remitted from overseas. The overseas earnings of some non-permanent resident taxpayers may exceed the maximum tax deduction allowed. For such taxpayers, the amount in excess can be deducted from the Special Income Tax for Reconstruction. However, no more may be deducted from the Special tax than the part of it that derives from overseas earnings.
The Special Income Tax for Reconstruction is further levied as a 500 surcharge on both prefectural and local body taxes, i.e., a 1,000 yen surcharge per tax payer per year.
In 2013, the Special Tax for Reconstruction raised one 1.224 trillion yen (i.e., about ten billion US dollars at today's exchange rate).
While the funds are no doubt doing much good, there have been problems identified with their allocation. For example, in 2012, it was discovered that some of the funds were being used to strengthen the defenses of Japanese whaling fleets against attacks from anti-whaling groups, and, somewhat less egregiously, to reinforce central government agency buildings in Tokyo against earthquakes - still a far cry from helping those in need in the north-east.
Also, it has been found that, to date, of the funds that go to companies, almost three-quarters go to the zaibatsu, with small-and-medium-sized companies sent to the back of the queue.
Bizarrely, in 2012, 43 million yen (c. USD355,000) of the funds was given to the girl idol group, Bird Princess. Sure, they are a group from the affected area, look like lovely girls, and no doubt do a lot to cheer people there up - but a 43 million yen state subsidy for pop?
Equally bizarrely, last year it was discovered that a large amount of the funds had gone to the Japan Publishing Organization for Information Infrastructure Development (JPO), part of whose mission is to sponsor the digitization of books in the earthquake affected area, in the sense of creating archives. A worthy cause, but ... several hundred such subsidized titles included works such as "The Ultimate in Erotic Ecstasy," "Super-Sexed Coercive Probe," and "Climaxing Housewives of Karuizawa" (Karuizawa being a resort area for the wealthy, far from the earthquake affected area). State-subsidized porn, in other words.
Well, in the stale, doughy air of the second floor of the backstreet Asakusa Tax Office, waiting for my tax payment to be dealt with at tortoise pace, I entertained myself with the possibility that 2.1% of the handful of brown banknotes I handed over is destined for stardom, whether in skirts on the dazzling stage, or in a "well-cummed" ebook reader.
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