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Thursday, Jan. 20, 2011

Key ministers meet to weigh tax hike

Proposals expected by June for coping with aging society, debt


By NATSUKO FUKUE and KANAKO TAKAHARA
Staff writers

Key Cabinet ministers agreed Wednesday to map out comprehensive proposals on social welfare and tax reforms, with an eye to hiking the sales levy, by June as they met for the first time to explore ways to cope with the problems of a rapidly aging society and mounting government debt.

One minister said after the meeting the government proposals might include a figure for a higher consumption tax — a move likely to trigger opposition from within the ruling Democratic Party of Japan.

Among those at the meeting were Kaoru Yosano, state minister in charge of economic and fiscal policy, Koichiro Genba, state minister in charge of national policy, Chief Cabinet Secretary Yukio Edano and Deputy Chief Cabinet Secretary Hirohisa Fujii.

Yosano told reporters after the meeting that the body he sets up to draft the proposals will include the finance and health ministers, as well as outside experts.

"We need to listen to the opinions of a wide range of people," he said.

A fiscal hawk who favors a consumption tax hike, Yosano will be in charge of drafting the proposals while Genba will coordinate policies with the opposition camp, Edano said, adding he will oversee the overall coordination.

But there is no easy road to consensus, even within the Cabinet.

Earlier in the day, Genba stressed the need to draft legislation to raise the sales tax by the end of March 2012. However, the hike "will be after the next general election," he said at the Foreign Correspondents' Club of Japan in Tokyo.

In contrast, Foreign Minister Seiji Maehara has said that if the government decides to raise the sales tax, Prime Minister Naoto Kan should dissolve the Lower House and call a snap election to gauge public opinion.

The political opposition presents another hurdle. Although Kan has called for a multiparty discussion of social welfare and tax reforms, the opposition insists the government first draft its own proposals.

"I think it's totally reasonable the opposition parties say they cannot talk without a proposal," Yosano said in a joint interview Wednesday with The Japan Times, adding the proposals should include specifics on tax and welfare system reforms.

Yosano did not specifically mention when the consumption tax should be raised, but said it is important to consider how a hike, if any, will affect consumer confidence and corporate investments.

"The social welfare system and tax will affect people's daily lives. It's crucial to try our best to gain understanding from the public," he said.

On the monthly child allowance, the DPJ's pet policy, Yosano backtracked on a position held while a member of the opposition.

In his book "Minshuto Ga Nihon Keizai Wo Hakai Suru" ("The DPJ will Destroy the Japanese Economy"), published last January, he slammed the child allowance as "pork barrel," given that the party could not secure a source of revenue for the ¥13,000 per child monthly handout.

However, since his Cabinet appointment he has aligned himself with the Kan administration's policy.

"(The child allowance) is already decided in the Diet," Yosano said. "I take it as an expansion of the child allowance (under the previous government led by the Liberal Democratic Party)" — the party he left last April.

The initial child allowance distributed under the LDP-led government provided ¥10,000 a month per child under 3 years old, and ¥5,000 for 3- to 12-year-olds.

Information from Kyodo added


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