OSAKA -- A Kansai business leader urged the government Wednesday to gradually hike the consumption tax to 10 percent from the current 5 percent to fund additional stimulative fiscal spending aimed at combating deflation.
"It is necessary to have the public shoulder the burden with responsibility in order to conquer deflation," Yoshihisa Akiyama, chairman of the Kansai Economic Federation, told a news conference.
"To return the growth rate of Japan's nominal gross domestic product to 3 percent (in three years), the government should conduct fiscal spending of around 10 trillion yen annually" in addition to expenditures under annual general-account budgets, he said.
"It is necessary to push up the consumption tax rate to 7 percent in three years' time and then to around 10 percent thereafter to finance these government outlays" to reach this GDP growth goal, he said.
Akiyama urged the government to devise and explain in detail to the public what it intends to do about social security benefits and costs, necessary fiscal expenditures and changes in the taxation system before hiking the consumption tax rate.
"It is necessary to secure a national consensus after devising a vision related to necessary fiscal expenditures, the tax system and matters related to social security programs," he said.
With the remarks, Akiyama joined the ranks of the leaders of the nation's top three business groups, all of whom suggested Monday that the government may have to hike the consumption tax to finance its outlays.
On Tuesday, Prime Minister Junichiro Koizumi ruled out the possibility of a consumption tax hike while he was in office, but said, "Discussing the issue is very welcome."