Senior members of the Japan Business Federation (Nippon Keidanren) called for a hike in the consumption tax in a meeting Thursday with New Komeito executives.
Nippon Keidanren representatives, led by its chairman, Hiroshi Okuda, held talks with New Komeito leader Takenori Kanzaki, policy chief Kazuo Kitagawa, tax policy chief Katsuyuki Hikasa and other party officials.
New Komeito is in the ruling coalition with the Liberal Democratic Party and the New Conservative Party.
During the talks, Okuda said Japan needs “integrated reforms of the tax, fiscal and social security systems” with regard to its rapidly aging population, Nippon Keidanren officials said.
“If things remain unchanged, it is inevitable the citizens’ burden ratio will reach 70 percent in 2025,” Okuda was quoted as saying, referring to the proportion of tax and social security payments to be deducted from income.
He said the government should make more use of the consumption tax because it is a method for collecting “a scanty amount from a broad target,” according to the officials.
According to the Finance Ministry, the ratio of tax and social security payments to income is estimated at 38.3 percent for fiscal 2002. The ratio was 35.9 percent in 1997 in the United States, 50 percent in 1999 in Britain and 75.4 percent in 1999 in Sweden, the ministry said.
In January, Nippon Keidanren released a report it called “the Okuda vision,” in which it proposed that the consumption tax, currently 5 percent, be raised by 1 percentage point every year from fiscal 2004 to 16 percent by fiscal 2014.
New Komeito tax policy chief Hikasa told the Nippon Keidanren officials it is difficult to raise the tax immediately, especially because Prime Minister Junichiro Koizumi has pledged he would not hike it during his tenure.
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