Aso stirs pot with tax plot

by Reiji Yoshida

Staff Writer

The consumption tax is driving a wedge between government officials. On one side sits Finance Minister Taro Aso, a vocal advocate for sticking to the plan to hike the levy next April, while on the other high-ranking officials pussyfoot, insisting it is the prime minister’s decision to make — sometime in the future.

The latest chapter in the saga began Tuesday when Aso, addressing a news conference, said the announcement to hike the 5 percent tax to 8 percent next April should be made before Sept. 5, when leaders of the Group of 20 nations are scheduled to meet for two days in Russia.

In Aso’s view, Japan should be prepared to demonstrate to its G-20 counterparts that it is serious about medium-term fiscal rehabilitation — of which a consumption tax hike is an integral part — to gain international trust.

Prime Minister Shinzo Abe and other Cabinet ministers have said a decision on whether to raise the tax will be made in October, after revised figures for April-June gross domestic product, to be announced Sept. 9, are reviewed.

Aso has countered that a preliminary report on Aug. 12 “can definitely be a reference” that the government can use to make a decision before the G-20 meets.

“If we don’t raise (the tax), the impact will be great because (a hike) has almost become something like an international commitment,” Aso told the news conference. “We’d like to do this as planned. . . . The earlier we make a decision, the better.”

Chief Cabinet Secretary Yoshihide Suga, however, was quick to rebuff Aso’s proposal, insisting no decision will be made until the government considers September’s revised GDP figures.

“We’re not thinking of it,” Suga said Tuesday when asked by reporters for a response to Aso’s remarks. “As the prime minister said during (Monday’s) news conference, the Cabinet will make a decision after seeing the second preliminary (revised) figure.”

For the moment at least, the government sees the G-20 summit as an opportunity to spell out a medium-term fiscal rehabilitation plan to be hammered out next month. Japan is saddled with public debt worth a staggering 200 percent of GDP.

Later Tuesday, a ranking official said the fiscal plan should be flexible enough to give Abe room to include the tax hike later based on the review of the GDP report.