NRI Papers
No.161 March 1, 2011
  Towards Introducing an Identification Number System for Social Security and Taxation  
Masato HIROSE

The Japanese government launched the Panel on Identification Number System for Social Security and Tax, and published its interim report towards introducing this system on June 29, 2010. In the past, several attempts have been made to introduce an identification number system in Japan. One attempt was to introduce a Green Card system, which was abolished before its introduction. The next move to develop a network system of Basic Resident Registers (known as Juki) and Juki cards led to lawsuits filed by residents in some prefectures and refusal to connect to the network by some municipalities, resulting in a sort of confusion regarding the system. In another attempt, the aim was to develop social security cards that integrate pension account books, health insurance cards and nursing care insurance cards. This plan is now pending because of a screening review of budget requests.

When we look at the United States, Sweden and South Korea, we find that their systems of social security and tax ID numbers are significant and are bringing about many advantages. ID numbers are used extensively for tax declaration and tax return procedures, and are shared by multiple administrative bodies responsible for the social security system for purposes such as identifying individual income, confirming contribution payments and adjusting overlapping benefits. Use in the private sector has also expanded. For example, ID numbers are used for personal identification at the time of employment and for credit information systems. As such, the systems have proved to be greatly advantageous in terms of accuracy and efficiency for companies and financial institutions in conducting their business operations.

On the other hand, there are increasing concerns over the government's management of personal information and risks such as information leakage, forgery and spoofing. In the US and European countries, laws and regulations are in place that stipulate the rights of individuals to control their personal information, and legal systems and mechanisms to protect such rights have been established. A third-party organization oversees both the public and private sectors to ensure the security of personal information and supervises its use.

When consideration is given to the improvement of convenience by the promotion of the e-government program and the impact that the ID number system would have on the private sector, it is essential to verify the cost effectiveness of an identification number system for social security and taxation. There must be some mechanisms that enable the creation of advantages whereby the initial investment costs as well as regular operating costs incurred by both the government and the private sector can be recovered.

Contents
I Studies on an Identification Number System for Social Security and Taxation
II Major Considerations in Introducing an Identification Number System for Social Security and Taxation
III Steps towards Introducing an Identification Number System for Social Security and Taxation

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