Business leaders welcomed the Lower House vote to raise the consumption tax, with the head of Keidanren, the nation’s most influential business lobby, lauding Prime Minister Yoshihiko Noda for his leadership.
“I greatly appreciate that legislation for integrated social security and tax reforms cleared the Lower House because of the leadership of Prime Minister Noda and cross-party efforts,” Hiromasa Yonekura, chairman of Keidanren, said in a statement Tuesday.
Yasuchika Hasegawa, chairman of the Japan Association of Corporate Executives, also welcomed the vote, saying the legislation is “extremely important not only to secure funding sources for social security but also to clearly show intent for fiscal reconstruction as a nation.”
The administration wants to double the 5 percent consumption tax rate in two stages by October 2015.
The tax hike is aimed at helping to pay for swelling social security costs as Japan’s fiscal health is the worst among major developed countries — even worse than some troubled eurozone members.
Yonekura and Hasegawa said they will seek to have the legislation enacted soon after it passes the Upper House and that Diet members should start bipartisan discussions on the details of social security reform.
Tadashi Okamura, chairman of the Japan Chamber of Commerce and Industry, warned in a statement that raising the consumption tax “will have a great impact on the economy and management of small and medium-size enterprises,” while urging the government to overcome deflation.
Japan Airlines Co. President Yoshiharu Ueki said the consumption tax has to be raised at some point.
“Unless we make the decision, it will leave problems for future generations, which is something I do not wish,” Ueki said. “I understand that we are already at a stage where we must decide what must be decided and cut what must be cut simultaneously or we won’t make it.”
Ueki said JAL will study the possibility of raising airfares, noting that is what happened when the tax was raised to 5 percent from 3 percent in 1997.
Kirin Brewery Co. President Yoshinori Isozaki said a tax hike is unavoidable, but he also voiced concern over its impact on beverage consumption and urged the government to alleviate the tax on alcoholic beverages.
“If the consumption tax is raised and the liquor tax is upheld, it would seriously hurt consumption . . . and have a major impact on beer companies,” he said.