The consumption tax will have to rise to 22 percent from the current 5 percent by fiscal 2015 if the government is to achieve a sound balance between tax revenues and outlays, unless major spending cuts are made, an advisory panel to the finance minister said Monday.
For the government to put its fiscal house in order without any tax hike, it would have to slash its general-account expenditures by 26.9 trillion yen by fiscal 2015, the Fiscal System Council said in a report on the nation's long-term financial outlook.
The panel recommended that Japan take a middle course between relying solely on a tax hike and making only cuts, saying, "A sharp outlay cut would undermine the people's daily lives and the government's functions."