Justification needed before tax hike: Abe

by Hiroko Nakata

The government must cut expenditures and gain public acceptance before raising the 5 percent consumption tax, Chief Cabinet Secretary Shinzo Abe said Tuesday.

“First of all, the public’s understanding is essential,” Abe told a regular news conference. “Whether people will understand it depends on whether the government has done what it has to do,” he said, referring to state efforts to cut fiscal spending.

His views were echoed by Prime Minister Junichiro Koizumi later the same day, who reiterated his reservations about submitting a bill to raise the consumption tax to the Diet next year.

“I think it would be quite difficult because it depends on how thoroughly we can cut waste in expenditures, and time is required to gain public understanding and cooperation,” Koizumi told reporters at his official residence.

Their remarks followed Finance Minister Sadakazu Tanigaki’s remarks Monday that the government should submit a bill to raise the consumption tax to the ordinary Diet session starting in 2007.

On Monday, an advisory panel to the finance minister said that unless major spending cuts are made, the consumption tax will have to rise to 22 percent by fiscal 2015 if the government is to achieve a sound balance between tax revenues and outlays.

Raising the tax is touchy, particularly in the runup to the September election to select Koizumi’s successor as Liberal Democratic Party president.

Information from Kyodo added