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Friday, May 28, 2010
New Keidanren chief Yonekura calls for hike in consumption tax
Hiromasa Yonekura, the newly appointed chairman of the Japan Business Federation (Nippon Keidanren), urged the government Thursday to raise the 5 percent consumption tax to improve the nation's fiscal health.
"The government should take a swift step toward the tax hike," Yonekura said at his first news conference after being approved as Keidanren's new chairman at a general meeting earlier in the day.
He said a gradual rise by 1 percentage point in the consumption tax every year would generate ¥2.5 trillion in tax revenue, which would help finance the swelling social welfare and pension costs that are growing by ¥1 trillion annually.
Yonekura said the consumption tax is "extremely low" when compared with sales levies found in Europe and some U.S. states.
The government, however, would have to support low-income households to ease their financial burden by providing food and drug stamps and coupons, such as in the U.S., he added.
Yonekura also stressed the importance of dialogue between Keidanren and the ruling Democratic Party of Japan, which has reportedly failed to develop close communications with the country's largest business lobby since it came to power last September.
"I believe the top three posts of the DPJ started to feel the necessity of mutual dialogue. We, the private sector, want to move forward with our proposals together with the policymakers," he said.
He also said the lobby group will hold discussions with the party and help examine which proposals will be introduced by the government and why.
As for the yen's recent upward trend against the dollar and the euro, Yonekura said any currency intervention by financial authorities would be unacceptable from a global point of view now that the scale of the economy has grown so much.
The yen's appreciation means a good chance for Japanese companies to make efforts to trim unnecessary costs, although fluctuations that are too sharp would remain unfavorable, he said.