Cabinet Office: Legislate tax hikes


The Cabinet Office called Tuesday for explicitly legislating future tax increases as a way to promote fiscal reconstruction.

The Cabinet Office made the proposal in an interim report on economic growth and fiscal health at a time when many lawmakers in the ruling Democratic Party of Japan have been expressing cautious views about tax hikes ahead of the party’s presidential election expected Monday.

The country’s fiscal condition will not improve without real economic growth even if prices rise, the Cabinet Office said.

“Price increases will boost not only tax revenues but also expenditures,” the report says. “Rising prices alone will not improve the balance of fiscal revenue and expenditure.”

With the apparent aim of countering the arguments against tax hikes in the ruling party, economic and fiscal policy minister Kaoru Yosano, who ordered the compilation of the report, said it is meaningless “to say something just to gain the favor of party members without considering what is happening in the markets.”

Meanwhile, Minister of Economy, Trade and Industry Banri Kaieda reiterated his stance against tax hikes, telling a news conference, “The government should raise funds without increasing taxes” to reconstruct the Tohoku region.

Kaieda, one of the hopefuls as the next prime minister, said the government can secure necessary funding by issuing no-interest bonds that offer inheritance tax benefits.