Japanese Government's Requirements for Post

The Ministry of Finance will require the Postal Public Corp. to pay for insurance that will fully guarantee postal savings deposits and postal life insurance accounts, the Nihon Keizai Shimbun learned Monday in its Tuesday morning edition. The ministry also plans to mandate that the new postal corporation, slated to begin operations in 2003, pay an amount equivalent to corporate tax to the national treasury. The aim of these measures is to level the playing field with competing private-sector institutions. The ministry also wants the postal revenues to offset the government’s declining overall revenue due to the prolonged economic downturn. The Finance Ministry is poised to begin negotiations with the Posts Ministry, which will have jurisdiction over the Postal Public Corp. But with the Posts Ministry definitely expected to protest such payments, the negotiations are not likely to go smoothly. The Postal Public Corp. is slated to take over postal savings, postal life insurance and mail services from the Postal Services Agency. This month, the government plans to submit to the Diet pertinent bills related to the creation of the new postal entity. The Finance Ministry seeks to include in the bills such items as deposit insurance premiums and the payment similar to the corporate tax. To prepare for payments to depositors in the event of a failure, banks and other private-sector financial institutions currently pay Y84 in insurance premiums per Y100,000 of deposits every year to the Deposit Insurance Corp. The postal savings system is projected to have a balance of about Y240 trillion as of the end of the current fiscal year, which ends March 31. If the same insurance rate is applied to the postal savings system, the Postal Public Corp. will be required to pay about Y200 billion in premiums to the government every year. The tax-equivalent payment to the national treasury will be calculated based on an annual earnings surplus, which is similar to the pretax profit of private-sector firms. After the Postal Public Corp. goes into operation, it is estimated that it will have an annual surplus of about Y1 trillion from postal savings alone. If the entity is required to pay the same 22% rate as public-service corporations – which is lower than the rate private-sector firms have to pay – then the government will receive more than Y200 billion from the payment annually.