Policy Recommendations
The success of the implementation of the income deduction scheme associated with
credit card and cash payment receipts can be summarized into two ways. One of them
strives to establish a favorable environment for the use of credit cards and cash receipts.
Even prior to the inception of the scheme, the government devoted its energies to
improving the existing foundation. After the scheme began, the government made it
mandatory for businesses of a prescribed size to enroll in the credit card network while
applying various standards based on business types. This provided the basis for enabling
many businesses to accept credit cards and cash receipts in commercial transactions.
The other strategy concerns the enhancement of the public’s acceptance of the scheme
by combining various policies and strategies related thereto. Apart from the provision of
an incentive for the buyers if they use credit cards and cash receipts in transactions, the
government has succeeded to raise the level of the public’s acceptance of the scheme by
granting the sellers tax allowances which can be offset against an increase in transaction
costs and tax burden. The government has been able to improve the overall level of
acceptance of interested parties of the scheme by operating lottery programs intended
for those who find it difficult to meet the minimum consumption requirement set from
an expense point of view (i.e. at least 10% of their salary). In addition, to prevent
intentional avoidance of the scheme, the government induced taxpayers to comply with
the scheme in conjunction with various administrative sanctions including tax penalties
and watchdog rewards program.
Therefore, when this income deduction scheme is reinstated, taking into account the two
attempted strategies stated above, it is necessary to expand and complement the existing
foundation for credit card usage, before and after its inception. In addition, it is essential
to provide economic incentives for any interested party including transaction parties, in
conjunction with administrative sanctions that may be enforced against violators of the
scheme. Another consideration in introducing the scheme relates to the opportunity to
create supplementary schemes to enable more taxpayers to use the scheme.
Meanwhile, it is crucial to look at socio-cultural environments. If the public cares more
about privacy, the collection of transaction information by tax authorities would not be
welcomed. Strong desire to protect privacy would make it difficult to implement the