Universal services are public services that should be maintained in a way that allows anyone to use them without distinction by area or region.
Postal service is one such universal service, handled by Japan Post Co., Ltd. (hereafter, “Japan Post”).
Other examples of universal services are electric power, communications, and water.
The Japan Post has a duty to maintain postal services as universal services. In exchange for this duty, the law provides for preferential treatment of the Japan Post in certain aspects.
We believe that there are circumstances in which, despite all possible management efforts, an organization providing a universal service—indispensable to the lives of citizens-may require a minimum of preferential treatment if it is in danger of becoming unable to maintain that service, once the scope of that danger has been well defined.
However, the final decision (Decision from the Information and Communications Commission on "Policies for guaranteeing universal postal services and invigorating the mail and correspondence delivery market: Consultation 1218, October 1, 2013") handed down by the Ministry of Internal Affairs and Communications' Information and Communications Commission Postal Measures Section (hereafter, Postal Measures Section) included the position that Japan Post should be given even greater preferential treatment to what it now receives.
And yet, according to the FY 2015 financial statement by business issued by Japan Post on July 31, all the company's lines of business for universal services (postal services, banking services, and insurance services) were profitable. Even after including the category of "other," which was in the red, the company had an overall balance in the black.
|※1||Category 1 (postal services) comprises business designated in Nihon yūbin kabushiki kaisha hō [Act on Japan Post Co., Ltd.] (hereafter, Nihon yūbin hō [Act on Japan Post]) art. 14, no. 1 (postal services; sales of revenue stamps; issuance of postcards, including monetary gifts; and other business incidental to these).|
|※2||Category 2 (banking services) comprises business designated in Nihon yūbin hō [Act on Japan Post] art. 14, no. 2 (bank teller services and other business associated with and incidental to this).|
|※3||Category 3 (insurance services) comprises business designated in Nihon yūbin hō [Act on Japan Post] art. 14, no. 3 (insurance agent services and other business associated with and incidental to this).|
|※4||Category 4 (other) comprises business designated in Nihon yūbin hō [Act on Japan Post] art. 14, no. 4 (parcels, real estate, sales of goods, etc.).|
Why does a profitable postal service need preferential tax treatment?
We do not feel that the final decision reached by the Postal Measures Section made a sufficient case for the scope of what is truly indispensable to citizens in designating a universal service.
As it stands, the only way this decision can be understood is as an attempt to further strengthen the preferential treatment given to Japan Post, under the banner of protecting a universal service, in order to make up for its significant losses in its "other" business category, which includes business such as dealing with packages, which is not a universal service.
Preferential tax treatment amounts to an investment of taxpayer money by another name. It means that the burden of maintaining this universal service is borne by taxpayers. We believe that in placing this burden on taxpayers, the provider of this service should be able to clearly demonstrate which lines of business and services it is having difficulty maintaining, and disclose its income and expenditures in a way that is easy for all taxpayers to understand.
The Japan Post's Yu-Pack, which was once included in the category of postal matter, is no longer a part of this universal service since postal privatization in 2007. It is currently classified under home parcel delivery, along with Yu-Mail.
This means that Japan Post handles both postal service, which is a universal service, and packages handling and delivery, which is not a universal service.
But when preferential treatment meant to sustain universal services, such as lower taxes on business facilities and fixed assets, is given to Japan Post, is this business of packages handling and delivery properly excluded?
Yamato Transport would like to see Japan Post's accounting strictly divided between their postal service and their package handling and delivery (cargo/package delivery services), and its revenues and expenditures made publicly available (broken down by service). Preferential treatment should be provided only after the scope of businesses and services that should be maintained as universal services have been identified, and it should be limited to cases in which those cannot avoid being in the red. Any preferential treatment should be minimal and explained in detail to the taxpaying public in a way that is easy to understand.
A number of the services included within the postal service category, considered a universal service, are actually used to send packages. Japan Post recommends using its Letter Pack and Smart Letter products for exchanging items such as auctioned goods. Items that can be shipped using EMS (international Express Mail Service) have expanded beyond letters and documents to include refrigerated items as well.
These package handling and delivery services are the ones relevant to competition with other home delivery service providers within Japan and elsewhere.
Under the current system, Japan Post is able to expand its services under the name of postal services, even though these are actually packages handling and delivery services, and it still receives preferential treatment, including traffic rule exemptions and simplified customs procedures. What this means is that it is able to expand a variety of parcel handling and delivery services while receiving preferential treatment meant to maintain universal services. Yamato Transport believes that this situation runs counter to the easing of regulations and the creation of conditions for fair and equitable competition.
Yamato Transport hopes that this unfair system will be revised as soon as possible in order to create a world in which all providers of packages handling and delivery services can compete on an equal footing.
Under the current laws, Japan Post is de facto the only provider that can actually handle "correspondence" nationwide. The laws set penalties for any customers that use packages handling and delivery services such as TA-Q-BIN, Yu-Pack, Yu-Mail, and Mail-Bin to send items that qualify as "correspondence."
What makes the issue more complicated is the fact that slight differences in the condition of the sending of a document (even if the content is the same) can affect whether it can be sent as a parcel or not. These criteria are so vague, it is difficult for the average user to understand the difference, and there are cases in which even the office of the Ministry of Communications and Internal Affairs cannot respond in a timely manner as to whether or not a document is considered "correspondence." The system is difficult to understand and inconvenient for both those sending packages and the companies handling them.
In order to avoid such situations, Yamato Transport made a proposal in December 2013 to the Postal Measures Section that the scope of what would be considered regulated "correspondence (letters and the like)" would be determined by the size of the envelope used to contain the document rather than the content of the document itself.
Our proposal on this was not accepted, however, and the scope of what qualifies as regulated "correspondence" remains unclear.
In order to eliminate the risk that our customers send something that qualifies as correspondence without realizing it, we ended our Kuroneko Mail-Bin service on March 31, 2015.
With the authorization of the Act on Delivery of Correspondence by Private Operators (hereafter, Correspondence Delivery Act) in 2003, it became possible for private companies to enter the market by providing "general correspondence delivery" services nationwide and "special correspondence" services within a limited range.
Due to the June 2015 revision to the Correspondence Delivery Act, the restrictions on size and fees for special correspondence delivery were eased slightly, but because of the persistence of extreme barriers to entry for general correspondence services—such as the requirement to set up roughly 100,000 new postboxes across the country—there is not even one private operator that has entered the general correspondence delivery business (which accounts for more than 99 percent of all correspondence delivered.)*
Yamato Transport believes that it is perfectly possible to apply lessons from previous privatizations of formerly public businesses to improve the usage rate of postboxes and the post office network (which should be considered social infrastructure); to obtain revenue through connection charges as with, for instance, the telephone business; and to work toward maintaining the stability of this universal service without increasing the load it places on taxpayers.
The easing of restrictions is premised on protecting the operator that is already privileged in this area; it means little in actual practice. Until this situation is improved, Yamato Transport believes that it would be unwise to enter this market.
* As of November 12, 2015