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Tuesday, Aug. 5, 2008
Detail goals before raising taxes: Ibuki
Before initiating any hike in the 5 percent consumption tax, the ruling bloc must clearly articulate to voters what policies it will pursue and its priorities in line with a higher levy, new Finance Minister Bunmei Ibuki said Monday.
Speculation is rife that Friday's appointment of Ibuki and Kaoru Yosano as economic and fiscal policy minister means Prime Minister Yasuo Fukuda wants to raise the consumption tax to cover ballooning social security costs. Both new ministers are considered advocates of a higher consumption tax.
"Before we ask voters to make a judgment, we need to show them what kind of public services will be offered and what financial resources will be used," Ibuki said in a joint interview.
Thus he wants the Liberal Democratic Party-New Komeito ruling coalition to include its "ideas on permanent financial resources" when it issues tax reform proposals by year's end.
In last year's tax reform proposals, the coalition skipped mention of either when or by how much the consumption tax would be raised, fearing a voter backlash.
"After that, when we draft a budget, we can say which policies need to be carried out and offer a way to secure permanent financial resources," Ibuki said, ruling out, however, the issuance of deficit-covering government bonds that would thus force the increased state debt burden on the next generation.
Ibuki, who served as LDP secretary general before he was appointed finance minister, said he will look into other financial sources that may be available for spending, including reserves in special accounts worth nearly ¥40 trillion.
"We will consider if funds accumulated in the past can be spent," he said, adding the ministry will carefully consider first if such funds should be used.
"Fiscal reconstruction could be likened to global warming," Ibuki said. "If we use a lot of energy right now, we will have to pass on a damaged Earth to the next generation."
The major task of Fukuda's new administration is to ensure resources to cover growing social security costs. But Ibuki said higher cigarette and road-related taxes are unlikely scenarios.
In 2004, the Pension Law was revised to increase government funding of the pension program from one-third to a half by 2009.
"Raising the cigarette tax is one option," he said. "But we should discuss this in the context of health issues and lowering medical costs."
He also said road-related taxes should be used primarily for road-related expenses, not for social welfare spending. Fukuda earlier in the year, however, agreed to consider freeing up some of these tax revenues for purposes not related to roads, implying social spending.
Commenting on a further stimulus package for small and midsize companies suffering from rising prices of oil and raw materials, Ibuki said the ministry first needs to analyze which industry is suffering the most and having the hardest time raising retail prices.
"Normally rising costs should be reflected in retail prices," he said. "But if there is a time gap or some other reason that a price hike cannot be carried out, we should help."
Significant events in Hori's career
1986 — Lands job at Sumitomo Corp.
1991 — Receives MBA from Harvard Business School.
1992 — Establishes Globis Corp. and starts offering MBA courses in Tokyo.
1993 — Starts offering MBA courses in Osaka.
2006 — Opens the Graduate School of Management, Globis University.
2008 — Graduate School of Management becomes educational corporation.