Financial services chief takes dim view of tax hike

by Hiroko Nakata

Newly appointed financial services and postal reform minister Shozaburo Jimi expressed caution Tuesday about raising the consumption tax, saying economic growth should come before taxes are raised.

“Economic recovery should come first. Then we should consider (finding) a permanent revenue source,” Jimi said at a news conference in response to questions about the controversial idea of hiking the consumption tax.

Prime Minister Naoto Kan mentioned last week the possibility of raising the consumption tax from the current 5 percent, adding later that he will consider 10 percent as “one of the references” for raising the rate.

Jimi, Kokumin Shinto’s secretary general, is the only Cabinet member who is not a member of Kan’s Democratic Party of Japan.

He took up his post earlier this month after Shizuka Kamei stepped down to protest the DPJ’s decision not to extend the Diet session to deliberate on his pet bill to scale back postal privatization.

Kamei, an advocate of more spending to stimulate demand, was also against raising the consumption tax before seeing economic growth.

As for the postal reform bill, Jimi said the agreement between the DPJ and Kokumin Shinto to pass the bill as soon as possible remains intact. He said the bill should be deliberated at the extraordinary Diet session after the July 11 Upper House election.

In a turnaround from Kamei’s stance, Jimi expressed reluctance to invest postal funds in overseas infrastructure projects.

“I believe the postal funds should deal with safe and stable investments,” Jimi told reporters in an interview Tuesday.

He said he hasn’t held talks yet with Internal Affairs and Communications Minister Kazuhiro Haraguchi, who has called for active investment overseas of postal savings funds.

“This is my personal opinion, but any investment with a high risk and a high return would not be suitable for the postal funds,” Jimi said.

“In any case, the final decision would depend on the president (of Japan Post Holdings Co.),” he said.