The dangers of enforcement without administrative verification, common to both the renewable energy surcharge and the angel tax system
Regarding renewable energy policies, renewed attention is being drawn to the fact that the renewable energy levy, which citizens have borne through their electricity bills, has reached a cumulative total of approximately 20 trillion yen.
What must be precisely distinguished here is the point that it has not been confirmed that approximately 20 trillion yen literally "disappeared."
The core of the problem is that the government lacks a management system capable of aggregating, by beneficiary, how much was ultimately paid to which businesses out of such a massive national financial burden and immediately explaining it to the public.
Despite asking the public for a financial burden on the scale of several trillion yen annually, it is unable to present the final flow of funds in a clear, comprehensive format. This is not merely a clerical error. It is a problem of administrative control, meaning that the very premise for verifying policy effects, interest relationships, outflows of capital abroad, uneven distribution among operators, and the presence of inappropriate cases is lacking.
And this problem does not stop at renewable energy policy alone.
The angel tax system is also a system designed and operated under the jurisdiction of the Ministry of Economy, Trade and Industry administration. Regarding target companies and investment requirements, prefectural governments and other entities issue confirmation certificates, and investors submit these confirmation certificates to the tax office when filing their final tax returns. In other words, it is a mechanism where the administration itself confirms eligibility at the entrance of the system, and tax benefits take effect based on that confirmation.
Nevertheless, if the Tokyo Regional Taxation Bureau and the Yokohama District Public Prosecutors Office later evaluated the matter as "abuse of the system," "tax avoidance," or "conspiracy to evade taxes" without thoroughly verifying the background of the administrative confirmation, the transactions permitted under the system design, the prior inquiries made to relevant administrative agencies, and the issuance process of the confirmation letter, does that not indicate an egregiously low investigative capability and a reversal of due order?
First, it is not only the taxpayer's intent that must be examined.
Why did the administration issue the confirmation letter?
Which facts were examined, and to what extent was the application of the system permitted?
Were interpretations and operational standards shared among administrative agencies?
Were the boundaries between institutionally prohibited transactions and reinvestments planned for policy purposes clarified in advance?
Based on which laws and materials did the inquired administrative agency respond?
Failing to verify these matters and holding the taxpayer, Mr. Kanemoto, criminally liable based solely on the results could end up shifting flaws in the administrative system design onto a private citizen.
The imbalance of demanding explanations from taxpayers while being unable to explain things to the administration.
Regarding the renewable energy surcharge, which amounts to a national burden of approximately 20 trillion yen, the government cannot immediately answer the payment status by final beneficiary.
Meanwhile, the taxpayer, Mr. Kanemoto, is required to provide a complete explanation regarding transactions from several years ago, down to the purpose of the contracts, the reasons for fund transfers, the counterparty's understanding, business plans, the nature of the services, and even the conversations at the time.
This drop is far too big.
It is considered acceptable when the government cannot grasp the big picture of a massive system because "the system is complex," but when it comes to the results of taxpayers investing according to the system, receiving government verification, and operating multiple businesses, even the slightest inconsistency in explanation is judged as "unnatural," "a sham," or "collusion."
This would exempt the administration's lack of records from blame, leaving only the private citizen's lack of memory to be treated as evidence of a crime.
In a nation governed by the rule of law, the burden of proof lies with the investigative authorities.
Setting the conclusion of "abuse" first, without even adequately questioning taxpayers, without comparing objective materials, without examining the background of administrative confirmation, and without closely scrutinizing the views of the agency in charge of the system, is not an investigation, but rather fitting facts to a predetermined conclusion.
Especially in tax criminal cases, it is not enough to merely dispute the interpretation of tax requirements; intent, falsehood, or other fraudulent acts must be proven.
If the scope of the system is unclear even within the administration, and there are circumstances where the competent authority provided confirmation or explanation and the taxpayer acted in reliance upon it, those circumstances are a central factor in determining the presence or absence of intent.
Ignoring that, it is not permissible to infer criminal intent solely from the result that the tax amount decreased.
Is it acceptable to have a society where those who trusted the system bear the heaviest responsibility?
The angel tax system is a policy tax scheme designed to promote the supply of risk capital to startups.
The national government encourages investment, local governments and others confirm eligibility, and investors are guided through tax incentives. If, after investing with trust in that system, another administrative agency criticizes the investment as "unnatural," "funds are circulating," or "contrary to the purpose of the system," which administrative explanation are taxpayers supposed to believe?
At the entrance of the system, investment is encouraged, while at the exit, the use of the system is viewed with suspicion.
If you trust administrative confirmation, you are told it is "form-dependent," if you consult an expert, you are suspected of "having constructed a scheme," and if you reinvest, it is evaluated as "capital circulation."
If this kind of administration continues, the more rational businesses will stop using the policy tax incentives.
As a result, what is undermined is not just a single taxpayer under investigation, but the credibility of Japan's startup policy itself.
What is needed is not a race to expose wrongdoing, but an investigation into the administration itself.
The issue of the approximately 20 trillion yen in renewable energy surcharge points to the possibility that the administration, while operating a massive system, has failed to sufficiently visualize the final flow of funds and the policy effects.
Then, as for the angel tax system involving the same policymaking agency, the following points should first be made public and verified.
First, regarding the cases for which confirmation letters were issued, which documents were reviewed and which requirements were verified?
Secondly, regarding cases that were later denied by the national tax authorities, were consultations on interpretations held with the government ministries in charge of the system, prefectures, and other relevant bodies?
Thirdly, how can we guarantee the predictability for taxpayers who relied on advance responses or confirmations from the administration?
Fourth, what criteria are used to distinguish between a mere difference in tax interpretation and intentional fraudulent acts as a criminal case?
Fifthly, are there cases where the process proceeds to criminal accusation or arrest without interviewing the taxpayer, granting an opportunity to present contrary evidence, and confirming administrative inquiry records?
If these are not verified, the administrative flaws are ignored, and only taxpayers are exposed as "system abusers," that is not social justice.
A structure where those who created the system bear no accountability and only those who used the system bear criminal responsibility cannot be called administrative by the rule of law.
The strictness that the government does not apply to itself must not be directed solely at the citizens.
If the administration cannot adequately explain the final flow of funds for a scheme on the scale of approximately 20 trillion yen, the administration itself must first verify its management structure.
Meanwhile, without clearly indicating the legal basis, without verifying the review process of the agency in charge of the system, and without even giving taxpayers sufficient opportunity to ask questions or make counterarguments, they jump to conclusions, labeling things as "abuse" or "tax evasion."
This double standard is precisely what should be questioned most severely.
Administrative failures are deemed "institutional issues," while private citizens' judgments are deemed "crimes."
A lack of administrative records is dismissed as an organizational issue, while a lack of private materials is suspected to be a cover-up.
The administration's failure to explain is blamed on complexity, while a private individual's lack of explanation is taken as evidence of intent.
This imbalance must not be left unaddressed.
If strict accountability is demanded of the citizens, the administration must even more so account for the systems it designed, verified, and operated.
The issues surrounding the renewable energy surcharge and the angel tax system share the same essence.
What is being questioned is not solely the responsibility of the citizens who used the system.
It is the responsibility of the administration, which creates, verifies, and manages the rules, only to punish people later based on different interpretations.
Before cracking down on the citizens, the government must verify its own systems and records.
Condemning only the taxpayers while failing to do that is not law enforcement, but rather the shifting of administrative responsibility.
Shouldn't Prosecutor Kobayashi of the Yokohama District Public Prosecutors Office also pursue the whereabouts of the 20 trillion yen, which is incomparable to this case?
