Ruling party panel approves tax hike plan

Kyodo

The Democratic Party of Japan’s tax panel approved proposed tax increases Tuesday that would raise most of the funds required for the government to compile an extra budget worth more than ¥11 trillion to pay for reconstruction following the March 11 calamities.

The DPJ will start preparing for discussions with opposition parties on the 10-year plan, which centers on higher rates for individual and corporate income taxes.

Some DPJ lawmakers, however, fear the government is rushing to raise taxes without paying due heed to the adverse impact on the economy, already weakened by the March disasters and the sharp appreciation of the yen.

Under the plan, individual income tax is to be raised for 10 years starting in January 2013 and corporate tax for three years starting next April. The plan also calls for increases in tobacco and local taxes.

The government is planning to issue special bonds to create the extra budget, the third for fiscal 2011.