The government will consider raising the consumption tax to secure revenues, even though its priority remains the elimination of unnecessary spending, Chief Cabinet Secretary Yasuo Fukuda said Tuesday.
“We need to consider it in light of the nation’s fiscal situation” and the balance with the comparable taxes of other countries, Fukuda told a news conference when asked about the possibility of raising the tax from the current 5 percent.
“But the Cabinet’s priority is on making sure that fiscal discipline is imposed,” he said.
Prime Minister Junichiro Koizumi has promised he will not raise the tax during his tenure.
Finance Minister Masajuro Shiokawa hinted at another news conference that a consumption tax hike is unavoidable.
“I don’t think the current tax system has the ability to cope with the future increase in social security costs,” he said. “I think a review of the direct and indirect taxes will become inevitable.”
Shiokawa said he believes indirect taxes, which include the consumption tax, would have to be increased.
Heizo Takenaka, minister of economic and fiscal policy, said that although the priority is to fund social security costs by doing away with unnecessary spending, discussions “on various choices from a long- to midterm viewpoint” would be necessary.
Takeo Hiranuma, minister of economy, trade and industry, described recent calls by business leaders for a consumption tax increase as “a significant proposal.”
Despite a string of remarks by Cabinet ministers advocating a tax hike debate, Koizumi said the government should push ahead with fiscal and administrative reforms rather than consider a consumption tax hike.
Hiroshi Okuda, chairman of the Japan Business Federation, proposed last week that the consumption tax be hiked by 1 percentage point each year beginning in fiscal 2004 until it reaches 16 percent in fiscal 2014.
The leaders of the nation’s two other top business groups — Yotaro Kobayashi of the Japan Association of Corporate Executives and Nobuo Yamaguchi of the Japan Chamber of Commerce and Industry — have backed a consumption tax increase.
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