From the Welfare State to the Tax-Free State
The Stages of Government


Chief Editor’s Monthly Column

Japanese Prime Minister, Shinzo Abe, has proposed a number of plans to increase taxes following the boost in confidence he has received from his victory at the 2017 elections.

Abe’s new proposals include raising social welfare fees for businesses to counterbalance the free education scheme, introducing ‘departure taxes’ for people leaving the country for private and business purposes, and further raising the consumption tax.

Abe has decided to apply the welfare state formula: heavily taxing wealthy companies and individuals to redistribute money to the weak.


Tax-Free State 1: Turn the Government into an Investment Company

Peter F. Drucker, the father of modern management, once warned that ineffective medical insurances and pensions must be cut. Big government welfare states will eventually dissolve and a move towards small government will be inescapable. What is needed then is a government that will bring definite results, he said.

In a similar vein, Konosuke Matsushita, founder of Panasonic, proposed the ‘tax-free state’ as an ideal form of government. In 1979 Matsushita proposed that the government “pool at least 10% of the tax revenue until we have a reserve of around JPY 1 Quadrillion and use it wisely to make taxation unnecessary”. He also suggested aiming for a ‘dividend state’, a government that returns its profits to the people.

This is the same idea as Matsushita’s ‘dam management’ investment system and his ideology of never loaning money.

Master Ryuho Okawa, founder and CEO of Happy Science, gave a public lecture in October entitled “The Conditions of State Prosperity” in which he emphasized the need to aim for a tax-free state. “Debtless management is not that easy, so we must start by using the power of our minds, visualization and practical effort,” he said.

Some countries have made progress toward achieving a tax-free state. For instance, the government in Singapore owns an investment company and uses its funds to cover 10% of its budget.

If Japan were to aim for a tax-free state it would need to amend the annual appropriation section of the Constitution, as it encourages the government to use up its budget each year.


The Hotoku Spirit

Matsushita’s vision of a tax-free state appears in the management philosophy at Panasonic: gratitude and repayment to others. He believed that individuals and enterprises must return more than they are given. Applying this idea to government gives rise to the idea of a tax-free state.

The tax-free state, first proposed in Japan by polymath Yukichi Fukuzawa, was based on the Hotoku spirit of Sontoku Ninomiya.

Sontoku was a peasant sage of Japan known for strongly advocating that each individual has his or her strengths that can be employed to bring benefits to many people.


Tax-Free State 2: Turn the Government into a Stock Company

The tax-free state can also be seen as an unprecedented method of turning the government into a stock company.

In 2005, Master Okawa received inspiration from the late Matsushita in which he proposed to “sieve through the state assets, sell what you can, find the market capitalization and issue stock. Appoint executives of private enterprises to the ministries and government offices to speed up work and move into the black”.

The privatization of Japan’s state railway in 1987 is emblematic of this approach of selling government assets to repay debt and establishing self-managing private sectors.

Back when it was state-owned, the railway could not use station buildings to create shops and restaurants to make money, so its debt rose to JPY 25 trillion. As soon as the privatized railway introduced in-station businesses it was able to make up for the debts in the railway department.

Turning the government into a stock company is a similar idea: it is able to do business. The current Diet members and Administrative Vice-Ministers are no good as businessmen. We need people from the business world to come in, train personnel and bring the state back into the black.

Then we need to create future industries by investing in transport infrastructure – like the Maglev – and defense, aviation and space technology. If this succeeds, the people will no longer consider the government to be an institution that taxes us, but a place that is worthy of greater investment.


The Government Should Collect Donations

Matsushita once proposed that the government collect donations.

Indeed, in the past it was natural for rich merchants and business owners to invest in their own public enterprises. The Yodoyabashi in Osaka is a bridge that was built and named after a 19th century merchant, and there are many more famous locations in Japan that were donated by wealthy businessmen. Matsushita himself built the Umeda new pedestrian bridge in Osaka.

It was business etiquette to repay society for the resources and personnel that brought success.

Income taxes during the Meiji era were a rare thing, and even the wealthy class was only taxed a few per cent, so many of these people felt inspired to donate towards infrastructure and education.

During and after WWII however, income tax shot up to 50%-90%, and public patrons all but disappeared. Regardless, the spirit of mutual help and repayment to society are deeply grounded in Japanese culture. We get glimpses of this in the volunteer work and donations that are made towards earthquake relief.

The Abe government is trying to make the wealthy class pay JPY 300 billion in order to solve the problem of overcrowded preschool waiting lists. The spirit of repayment is there nonetheless amongst the elderly generation who are volunteering to become caretakers of the children.

Harnessing this spirit of repayment and good will could lead the country to become a tax-free state.


Tax-Free State 3: Turn the Government into a Religious State

There was a time in history when almost every citizen offered their good will to achieve something great for the country: the Nara Buddha statue project in the 8th century CE is one such example.

During his reign, Emperor Shomu announced his desire to save all people through Buddhism, and ordered the people to contribute workers and funds, “be it a blade of grass or a handful of dirt”. He appointed the venerable Gyoki to overlook the project and he gathered from the people tokens of gratitude and repayment towards Buddha.

The total cost was said to be twice the annual state budget (twice the current Japanese budget would be JPY 200 trillion), and the success of the project demonstrates that it is possible to harness the good will of the people as long as they find value and glory in it.

To summarize, there are 3 stages to creating a tax-free state: turning the government into an investment company, turning the government into a stock company, and turning the government into a religious state. The later stages have more of the energy and spirit of repayment to society and to God.

Thus, government has its stages and the ideal government is the religious state to which all people feel a need to donate.


How to Erase Marxism

The Abe government, however, is working in accordance with the lowest stage of government: Marxist socialism.

Marx based his theory on: 1 atheism and materialism, 2 envy towards wealthy people and labeling them evildoers, and 3 justifying taking other peoples’ property.

In other words, the Abe government is advancing a policy of increasing taxes that will rob the country of its wealth.

Reversing this movement requires the revival of the Hotoku (repayment) spirit of a scale large enough to overpower Marxism.

For this we need a political power and religion that has: 1 infinite gratitude towards God (faith), 2 the spirit of repayment to God and the world (love that gives) and 3 the spirit of self-help, where those who work hard reap the benefits.

Under this ideology the people will be able to use their strengths to bring prosperity to themselves and to society.

The effort needed to get closer to a tax-free state is the eradication of the Marxist policies that still pervade this world.

From the Welfare State to the Tax-Free State
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