A senior Liberal Democratic Party official hinted Sunday the consumption tax will have to go up in fiscal 2007 to help finance future social security costs.
Asked by a moderator on a Fuji TV program whether the LDP’s election manifesto means the consumption tax — currently at 5 percent — will be hiked in the year starting in April 2007, LDP Secretary General Tsutomu Takebe said, “Yes.”
The LDP now has to consider the margin of increase, the party’s No. 2 man said.
Takebe is the first top LDP official to spell out clearly the need to raise the consumption tax in fiscal 2007.
The manifesto announced by the LDP for the Sept. 11 House of Representatives election only says an overhaul of the tax system, including the consumption tax, should be carried out as early as fiscal 2007.
Later Sunday, however, Takebe told reporters at LDP headquarters in Tokyo that he did not mean that the party would raise the levy in fiscal 2007, only that comprehensive tax reform, including the consumption tax, would be drawn up and considered at that time.
Prime Minister Junichiro Koizumi has repeatedly said he will not raise the consumption tax while he is LDP president. His term as head of the LDP expires in September 2006.
Takebe said it is becoming necessary to consider measures to finance rising social security costs, including a hike in the consumption tax, while making efforts to cut government spending.
“Social welfare is expensive, so (the issue is) how can we find the wide yet thin financing for it,” he said. “While on the one hand we will get rid of wasteful expenditures, on the other we will seek the public’s cooperation.”
At the same time, however, he stressed that a tax hike resulting only in an increased burden on salaried workers must be avoided.
Meanwhile, Takenori Kanzaki, leader of LDP coalition partner New Komeito, later said, “It has not yet been decided whether to raise the consumption tax or not. If it is necessary to raise (the tax), it will be unavoidable, but we will have to comprehensively review government expenditures before that.”
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