A consumption tax cut must be dealt with as part of a long-term package that would include a future consumption tax increase to ensure funds for welfare programs, the opposition Liberal Party decided Friday.
At a meeting of the party's committee on tax reforms, party members agreed that the current consumption tax of 5 percent should be reduced to zero percent, and the government should increase it by 1 point every year only after the economy picks up, according to party officials.
In addition, the tax should eventually be transformed to a "welfare tax" that would be spent solely on welfare purposes, they said.
They also said they will seek to cut nearly 15 trillion yen, or 10 percent, from the expenditures of Japan's central and municipal governments through administrative reform.
Furthermore, the savings should be passed on to taxpayers through personal and corporate income tax reductions, they said.
Liberal Party head Ichiro Ozawa will urge Prime Minister Keizo Obuchi to implement the tax plan when the two meet Monday; Obuchi's Liberal Democratic Party is unlikely to accept the proposal.