Setoff of Inhabitants' Tax against Kokumin-nenkin refund

[badmigraine 0]

I left Japan last October, just as the bills for my Inhabitants' Tax (aka "ward tax" or "kuminzei") were starting to pile up. The total is some several thousand US$...

 

After returning to the US, I applied for a refund of my Kokumin-nenkin. The total is around US$7000.

 

I got a letter from the ward office in English, asking me to contact them about the unpaid ward tax.

 

No Kokumin-nenkin refund has appeared, even after all these months (this refund only took 4 weeks when I did it in 1999!).

 

Obviously, they are holding the Kokumin-nenkin refund until I contact them about the unpaid ward tax.

 

I doubt they are authorized under J law to automatically offset the two; the Kokumin-nenkin is a national tax, whereas the ward tax varies by ward, and is administered and collected by each ward separately.

 

Nevertheless, the people seem to be working together somehow!!

 

Damn. I didn't think it was so hard to be a tax cheat!!

 

[veronica 2]

Erm, perhaps you should have paid your taxes.......

[Tosk 0]

Have they billed you for the unpaid tax too...?

 

[badmigraine 0]

Veronica, this post is meant to be both a moral tale and a practical guide, and each reader should take what they can from it.

 

A DOSE OF REALITY

I should have paid my taxes just like I should have driven exactly the speed limit and never parked overtime at a parking meter...

 

Would YOU voluntarily pay $6000 in taxes to a country you were leaving, just when you needed all your savings to relocate, buy a car, rent a house?

 

Erm I doubt it. And you wouldn't be extradited, you know.

 

I paid my Japanese income, health and retirement taxes, because those were deducted automatically from my paycheck.

 

However, the Ward Tax is collected differently: let me give you a practical example, as this will be educational for all.

 

 

HOW THE WARD TAX WORKS:

In 2001, you are registered in Shibuya Ward.

 

You get a monthly paycheck for your job at Sony.

 

Income tax, health tax and retirement tax are all taken out automatically.

 

If you remain officially registered in Shibuya Ward on January 1, 2002, then you owe Ward Tax to Shibuya Ward.

 

How much tax? It's a percentage of your 2001 income. When do the bills come? Quarterly, for 1/4 of the total amount.

 

If you DO NOT remain officially registered in Shibuya Ward as of January 1, 2002, then you DO NOT owe Ward Tax to Shibuya.

 

To whom do you owe it in such case?

 

If you have moved to another Ward and are officially registered there as of January 1, then you owe the Ward Tax to THAT Ward.

 

If you have left Japan completely, then you don't owe the Ward Tax to ANYBODY.

 

What happens if you DON'T PAY the Ward Tax?

 

It goes away after 5 years.

 

 

A PRACTICAL PRIMER

Can you begin to see the issues here?

 

One issue is the shock of getting a bill in April of 2002 based on your 2001 income. You may be UNEMPLOYED or POOR in 2002, and have no money to pay the tax...whereas in 2001 you had a great job and were, even then, unhappy to see so many yen withheld for income, health and retirement taxes.

 

Many foreigners avoid the Ward Tax by constantly moving to different Wards so the system has a hard time tracking them. They'll eventually leave Japan anyway, they figure, so who cares?

 

A lot of Japanese people don't pay it either, at least according to what I have heard from Japanese friends and relatives. The Wards can't garnish your income, they can't imprison you, they can't really do much of anything except keep sending you bills saying "let's pay our Ward Taxes!".

 

LET NOT HE WHO HAS DIRTY HANDS COME TO EQUITY

As for me, I knew the bill was coming, but I left my job in mid-2002 and was trying to save for my return to the US. I did not plan to pay the Ward Tax, but I feared that it might somehow be automatically deducted from my retirement tax refund.

 

The particular lesson I have learned here is that the people at the Ward office are holding up my retirement tax refund until I contact them or pay the Ward Tax.

 

I wasn't sure if they could do this, because the retirement tax is a Japanese national tax, whereas the Ward Tax is not; and both are nominally administered by totally different agencies.

 

It seems the two sets of people are in communication...the left hand does know what the right is doing.

 

To find out whether they can legally hold up my tax refund or not would cost more in lawyers' fees than the actual amount of the refund itself. And, as you point out, as long as I owe taxes to Shibuya Ward I have unclean hands.

 

 

MY PERSONAL PHILOSOPHY ON TAXES

Taxation is a form of theft whereby a private individual is forced by threat of confinement and government action to pay a portion of their income to the state.

 

It's like an obligatory tithe to the Lord of the Manor.

 

The total amount of tax that I pay here in the US, after you combine Federal and State income taxes, social security, Medicare, city and local taxes; plus the gasoline tax, liquor tax, luxury taxes, sales tax and other assorted taxes, approaches 50% of my gross income.

 

It just seems unreasonable to me to have to pay HALF my income out in taxes, especially when I see so much government waste and mismanagement, and when I disagree so strongly with much of what the American government does.

 

Non-payment of taxes is a "malum prohibitum" (a prohibited wrong, like parking overtime at a meter), as opposed to a "malum in se" (a moral wrong, like battery or theft).

 

If I can ever skip tax payment with little fear of consequences, I will do it every time.

 

I'd bet that 95% of the people in the world feel the same way. That's why they have to make sure you get in big trouble for non-payment of taxes...nobody would pay if they never got into big trouble.

 

I've always filed and paid my US tax returns most scrupulously, because the IRS can really screw you up if you don't.

 

But the Japanese Ward Tax? This is one of the wimpiest collection regimes around, and the country is loaded with folks--Japanese as well as foreign--who don't pay, because there is little downside for them.

 

CONCLUSION

I timed my Japan departure wrong. I could have avoided this tax entirely by simply not being registered in any Ward on January 1, 2002...

 

Well, I think I may call up the number they sent me to see what I can do. I'll keep the lot of you posted on the result, as I know each and every one of you may be thoroughly bored by this post but know that one day, when you leave Japan (if ever), you will be glad you printed this out and timed your official actions accordingly.

 

[snowboard_freak 0]

Interesting post there BM.

 

Just one question though.

 

 Quote:

Originally posted by badmigraine:

It just seems unreasonable to me to have to pay HALF my income out in taxes, especially when I see so much government waste and mismanagement, and when I disagree so strongly with much of what the American government does.

If you don't like a lot of what the US government does why are you moving back?

[snobee 0]

A Nice tell all Badmigraine. I think most would agree with your sentiments, esp. re. some of the grossed out local taxes applied. However, I console myself here with the knowledge that the direct income tax I pay is piffling compared to what I'd be paying in Oz(Maybe being a self employed family man allows me to extract the max from the system legally) Also at 5% the after sales tax is low, low, low when compared to other "developed" economies.

But this doesn't solve your dilemna eh? Probably you are right re. the collusion between local & National govt. so your chances are slim. But good luck and DO keep us posted as many of us have been, are or will be in similar situations. Nothing like setting a precedent.

[badmigraine 0]

Hey snowboard_freak!

 

Good question.

 

I presume you may be thinking about US involvement in Arab affairs? If so, I hate what the US is doing over there and even though foreign policy does not represent the sum totality of any nation's life, land or culture, if you really disagree with your country's way of doing something, that might be good motivation to think about living elsewhere.

 

PROBLEMS WITH THIS APPROACH:

There is this thing called "democracy" where people of opposing viewpionts who live in the same country can hash it out among themselves, so I am not supposed to leave just because I don't like the politics. I am supposed to do what I can to change things to the way that I like. If everyone had to agree with everything a country does before living there, nobody would live in any country. In fact, I hope a lot more people who disagree with the US will move here, don't you? It would help a lot. I thought this country was founded by some people who could no longer stand to live in places where everyone had to think alike. I hope you're not suggesting that all dissenters should on principle leave the US?

 

But it's worse than just US foreign affairs for me. I have a lot of long and bitter complaints about US domestic affairs too...

 

Could dissatisfaction with taxes, various laws, supreme arrogance + naivety, elephantine fast-food bodies, welfare abuse, intolerable health-care costs, petty self-serving politicians, jail/police human rights abuses, hunger in the ghettos, racism, the hypocritically wasteful "War on [some] Drugs", rotten cable TV programming and expensive so-called "broadband" Net services that only run around 600k be a reason to think about leaving?

 

PROBLEMS WITH THIS APPROACH:

I grew up here, have a US passport, my parents, brothers/sisters and their several new little kids all live here, it time for my new Japanese wife to finally learn to speak some English, and, as above, I have the power to try to make some changes and adjust my life to the way I like.

 

But none of this seems to explain to my satisfaction why I moved back here.

 

Now that I think about it, there are 3 main reasons I moved back here:

 

(a) After 8 years in Tokyo, time for a change;

( Cheap living here in the bosom of my family;

© Snowboarding monster scary runs at big US and Canadian resorts.

 

How's that?

 

[mikazooki 0]

im being bugged for ward tax i didnt pay when i left japan (with no intention of returning )two years ago in may. [i.e left may 2001, they are charging me for jan 2002, when i wasnt here, had no clue then i was returning, but returned july 2002, for the gf] i think they are whacking penalties on. some dude comes round monthly, and i hide under the bed sheets until he goes away.

they want me to show proof i was working for 12 mths outside japan they will cancel it. i was away (not working the whole time) for 13 months.

 

do u know how this stands badmigs?

[badmigraine 0]

mikazooki, your Jan 2002 bill is ward tax due because you were registered in that ward on Jan. 1, 2002.

 

It is calculated by taking your 2001 Japan income and multiplying it by a percentage (the actual percentage varies by ward, I believe it's around 2% to 5% or so).

 

My information is that if you are registered in your ward on January 1, 2002, then you owe the tax. This would be true regardless of where you physically live/work, because the mere fact of being a registered inhabitant of that ward on Jan. 1 makes you liable for the tax.

 

If you had cancelled your visa upon leaving in May, 2001, you'd owe no tax.

 

I've never heard of this "prove you worked 12 months outside of Japan" gambit, but it sounds plausible. Maybe living/working outside of Japan for 12 consecutive months somehow removes you from the ward registration rolls, retroactive to the date the 12 months began (May, '01 for you)?

 

If so, that would mean you were technically NOT registered in that ward on Jan. 1, '02, and therefore not liable for the tax.

 

Maybe that's it?

 

Zooks, why can't you prove you were working for the 12 months outside of Japan?

 

Presumably the immigration entry/exit stamps in your passport will show you were physically present in another country for long enough to have been working there for 12 months.

 

You can't assemble any pay stubs, bank/checking account deposit records, credit card statements, telephone bills, or anything like that which would evidence employment for that period?

 

One final thought: as a lawyer, I doubt that the issue of whether you are or are not considered "registered" in a ward depends upon the fact of EMPLOYMENT elsewhere. Rather, I would think it had to do only with place of LEGAL RESIDENCE (you can only have 1 of these).

 

Legal residence is more than mere physical presence. At some point, physical presence in a place becomes more than just a long vacation or wandering around. It becomes legal residence and can be evidenced by one, some or a cluster of things: intention to make a place your primary abode, employment in that place, having a bank account there, phone/gas/electric/water bills in your name there, renting/buying accommodations there, having a vehicle there, etc.

 

Of course mere physical presence in another country (the entry/exit stamps in your passport should show this) is one strong factor that you could use as evidence of your legal residence outside of Japan.

 

How about if you get some other stuff too, like a notarized copy of your apartment rental contract, your utility bills, your bank account outside of Japan, and employment records if you can find them. If you can't get employment records, how about getting sworn statements from people who have personal knowledge of it and will vouch for the fact that you did?

 

It may be that your ward's request for proof of 12 months of consecutive employment outside of Japan is a lazy way of saying "prove your legal residence outside of Japan"...employment records would be slam-dunk evidence thereof, so maybe that is why they are asking for that.

 

If you took a lot of this stuff down to the ward and made your case, you might get somewhere. Even if you didn't, you'd be no worse off than before, since they can't put you in jail and as far as I know can't dock your current pay for those taxes. Furthermore, they are canceled after 5 years (a long time to hide under the sheets but actually not a bad alternative when you consider it).

 

Does any of this make sense to you?

[mikazooki 0]

cheers badmigs, that clears up a little of the situation. the reasons for my lack of proof was the mobility during this period, nz, oz, and europe. my plans were changing every few months at that stage. i think it must be a residence point they r interested in, cos they said so i long as i wasnt travelling for 12 months (which i was and wasnt), so i see their standpoint then. they r hardly asking for an arm and a leg so maybe i'll do the right thing and pay up... however, without your explanation, i would still have no idea as to why they were bugging me. maybe i wont hide next they come.

 

thanks

[snowboard_freak 0]

BM - suprsiingly enoguh i wasn't specifically talking the US involvement with Iraq et al. I just thinking in general terms.

 

I wasn't trying to start shit i was just curious. It's good that you want yse the democracy to try and change things, but when it comes down it a lot more people need to think the same way you do in order for there to be any change.

 

I like the three reason for wanting to move back, especially point ©.

[badmigraine 0]

Hey _freak, I knowed you weren't trying to start anything!

 

It was a good question that got me wondering exactly what it was that had me move back here, when I could have stayed in Japan working, or loafed around Niseko all winter (!), or gone to Italy or even New Zealand to board with Mogski's olds.

 

Since posting my reasons (a) - ©, I've come up with another one: me and my siblings live around a smallish lake, and my bro has lots of boats including a MasterCraft ski boat and an X-Star wakeboarding boat.

 

Now for people trapped in the flat, warm and green midwest, this is a nice solution for the boarding jones that comes on from time to time.

 

That and these tubs of freezable margaritas selling at Sam's Club for about 500 yen (you dump in as much tequila as you want and pop the tub in the freezer...the next day you've got the equivalent of about 2 pitchers of frozen lime or strawberry margarita that you can just scoop out like ice cream into glasses and drink away...

 

Ahhh summer...