Abe advisers divided over tax hike

Kyodo

Taichi Sakaiya, adviser to Prime Minister Shinzo Abe, said Saturday the consumption tax should be raised to 8 percent from the current 5 percent next April as scheduled.

Postponing the tax hike “will hurt trust in Japan’s policy implementation,” Sakaiya, who was director general of the now-defunct Economic Planning Agency, told a TV program.

He also urged the government to consider reducing income and inheritance taxes to soften the impact of the hike on the economy.

Under legislation enacted last August, the government plans to double the sales tax rate in two stages — to 8 percent in April 2014 and to 10 percent in October 2015 — to cover swelling social security costs driven by the rapidly graying society.

On the same program, University of Shizuoka professor Etsuro Honda, another Abe adviser, urge the rate be raised by 1 point per year, warning that the economy won’t be able to handle the tax hike.