Japan's biz leaders push for raising sales tax beyond 10%

Business leaders have called on the government to raise the consumption tax to more than 10 percent while maintaining its determination to promote fiscal responsibility.

The comments come after Prime Minister Shinzo Abe announced a plan to review the use of revenue from the second stage of the tax hike to 10 percent slated for October 2019. The first stage raised it to the current 8 percent from 5 percent.

Abe said part of the portion intended to be set aside to reduce the government’s massive debt will instead be used to fund measures to promote human resource development, the latest policy pillar touted by his administration.

Accordingly, Abe moved back the timing for Japan achieving a budget surplus beyond fiscal 2020.

Sadayuki Sakakibara, chairman of Keidanren (the Japan Business Federation), welcomed Abe’s resolve to go through with the tax hike as planned and showed his understanding of Abe’s envisaged change in the use of the additional revenue expected from the tax hike.

Sakakibara, who doubles as chairman of the Fiscal System Council, an advisory panel to Finance Minister Taro Aso, said the government should continue to be aware of the need to raise taxes, without drawing the line at 10 percent.

The rate was raised to 8 percent from 5 percent in April 2014 as part of a two-stage plan to double the consumption tax. The second stage, which will raise it to 10 percent, has been postponed twice.

Yoshimitsu Kobayashi, chief of the Japan Association of Corporate Executives (Keizai Doyukai), said: “The government needs to send out a message that the consumption tax rate hike will not end at 10 percent,” while noting that it is “very regrettable” the timing for achieving a budget surplus was pushed back.

Akio Mimura, chairman of the Japan Chamber of Commerce and Industry, said, “I think it would be possible for the consumption tax rate to be raised further.”