Prime Minister Keizo Obuchi said Tuesday he has no intention to reduce the nation’s consumption tax and defended the government’s proposed plan to implement nearly 7 trillion yen in cuts in personal income and corporate taxes.
“The 2 percentage point hike in the consumption tax in April 1997 was inevitable in view of the growing future social security burden,” he said. “And I have no intention to bring the rate down now.”
The prime minister made the remarks in response to a statement by Kazuo Shii, the Japanese Communist Party’s central committee secretariat, during an afternoon session of the Lower House Budget Committee.
Shii demanded that the government bring the current 5 percent consumption tax rate down to 3 percent in order to boost consumption, which he describes as a critical step to reviving the overall economy. “The government’s proposed tax reduction scheme is to suck up money from the general public for the sake of placing an easier burden on a handful of high-income earners and big companies,” he said. “It would bring nothing but adverse wind to the economy.”
In a bid to brighten consumer sentiment, the government has been proposing permanent corporate tax cuts of more than 2 trillion yen beginning in April and temporary personal income tax cuts of 4 trillion yen beginning in January.
But Shii said he believes the majority of taxpayers would effectively end up with a greater burden because current special tax-alleviation measures would be replaced by the new “cuts.”
Finance Minister Kiichi Miyazawa acknowledged that some of those who were exempt from income tax burdens under the special alleviation scheme may be asked to take up their share of the tax burden later. He also said that the planned 4 trillion yen in income tax cuts will be implemented for an indefinite period, not just for one year as has been the case in the ongoing reduction scheme, and thereby make people feel more comfortable about spending money.
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