Page:Economic Reform Policy by Envoy Dodge (Dodge Line).pdf/24

 8. IMMEDIATE RELEASE 15.4.49 (public)

One leg of the "stilts" has been built from subsidies. These have been hidden in the transactions of the foreign trade account and have not been clearly shown in the budget. Actually they are government grants to particular producers, or consumers, from the government tax revenues collected from all of the people and from the proceeds of the U.S. aid furnished Japan. Now these actions will be made clear and grants of tax money to reduce prices of special goods or products to consumers will be seen.

Subsidies are exposed in the budget so as to clearly place the responsibility for their use in the Japanese government and to ensure that appropriate action will be taken to reduce and finally eliminate them. They represent a large amount, seen for the first time. But the amount is actually much less than it would have been had the practice of last year been fully extended to the wage and price levels of this year. The amount does embody a substantial reduction. It should be progressively eliminated.

This practice of the general use of subsidies is abnormal and undesirable. It creates fictious [sic] and unnatural price relationships. Also it is more costly than the mere figures indicate. The amount collected in taxes for subsidies is first reduced by the other administrative costs of the government and the operating costs of every Koban or government departmet [sic] handling the transaction until the remainder is actually applied to a consumer price of food, material or product. Thus the consumer taxpayer inevitably receives back only part of what he pays out for this purpose. Bu the taxes are paid by all of the people and except for subsidies granted to hold down the price of basic foods consumed by all the people, the tax proceeds going into subsidies are distributed for the benefit and protection of special groups of people.