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Wednesday, July 15, 2009

Diet calls shots on taxes: top finance bureaucrat

Staff writer

The Finance Ministry's top bureaucrat, Yasutake Tango, said this week his ministry will prepare to raise the consumption tax as stipulated by law, but it is also ready to change course if the Democratic Party of Japan, which is reportedly against a consumption tax hike over the next four years, takes power.

News photo
Talking taxes: Yasutake Tango, the new administrative vice finance minister, is interviewed by The Japan Times in Tokyo on Monday. TAKAHIRO FUKADA PHOTO

"One basic, big principle is that the administrative agency implements policies based on laws approved by the Diet," Tango, the new administrative vice finance minister, said in an interview with The Japan Times. "First, it is basic that we will make various preparations in accordance with them."

A provision of the partially revised income tax law that passed the Diet in March stipulates that the government should revise the consumption tax and other taxes to establish a sustainable fiscal structure, provided the economy improves within three years.

While stressing the importance of the consumption tax as a stable revenue source, Tango vowed to study carefully how to mitigate the tax burden on low-income earners.

Even if the government changes and the DPJ decides against raising the current 5 percent consumption tax rate, Tango said his ministry will serve the new Cabinet members.

"We believe it is our role to appropriately assist the prime minister and the finance minister," he said.

Though the DPJ has hinted it may rewrite the budgetary request guideline for the next fiscal year if it comes to power, Tango said no one should be concerned about whether the budget will be implemented on time.

"When considering the current economic situation and people's lives, it is necessary for us to compile the fiscal 2010 budget within this year, submit it to the Diet next January, have the Diet deliberate and approve it within this fiscal year and be able to execute the budget from April 1 next year," Tango said. "We would like to make efforts so that we will be able to compile the budget with such a basic policy."

Tango served as secretary under reform-minded Prime Minister Junichiro Koizumi, whose belt-tightening policies have largely been jettisoned by the current administration of Prime Minister Taro Aso. In particular, Aso has stopped automatic cuts in social security spending and endorsed a record-high spending cap for the fiscal 2010 budget.

Nevertheless, Tango said he still believes Aso is remaining true to some basic principles of the Koizumi reforms while having to engineer new policies to cope with the current economic crisis.

"Even now, the basic idea of (Koizumi's fiscal policy) continues to exist," Tango said. "But it goes without saying that new judgments and agendas must be applied to the problems of the new era."

On the international front, Tango said he believes the dollar will remain the world's principal currency despite the recently reported opposition of some emerging countries to its dominance.

"When considering the conditions of a key currency, I certainly believe we only have the dollar," Tango said.

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The Japan Times

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