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Friday, Oct. 5, 2012

10% sales tax won't cut it: DPJ's Fujii


Future governments will be forced to raise the consumption tax by more than the planned hike to 10 percent in October 2015, according to former Finance Minister Hirohisa Fujii.

News photo
Hirohisa Fujii

Increasing the levy to 10 percent "will not be the end" of Japan's dire fiscal predicament, Fujii said during a recent lecture meeting in Tokyo sponsored by the Research Institute of Japan.

Fujii, a veteran Democratic Party of Japan lawmaker who now serves as the ruling party's supreme adviser, noted that it will still be difficult to achieve a primary budget surplus by fiscal 2020 even after the current 5 percent consumption tax is doubled by 2015.

He stressed the importance of the agreement reached in June between the DPJ and the two largest opposition groups, the Liberal Democratic Party and New Komeito, on implementing comprehensive tax and social security system reforms.

The three parties have been "walking in the same direction for years" regarding these reforms, he said, calling on the LDP's new executive lineup and recently elected President Shinzo Abe to adhere to the deal.

The June agreement paved the way for the enactment of legislation related to the reforms in August, including a bill to increase the consumption tax to 8 percent in April 2014 and to 10 percent in October 2015.

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