Govt, ruling parties eye sales tax hike around 2015
Written by Writer on Sunday, October 26th, 2008
Govt, ruling parties eye sales tax hike around 2015
The Yomiuri Shimbun
The government and the ruling parties plan to raise the consumption tax rate by the mid-2010s, but cut tax rates for a three-year period before then, it has been learned.
The basic policy for a schedule to overhaul the tax system over the medium term will be included in a new economic stimulus package that the government and Liberal Democratic Party-New Komeito ruling bloc will release this week.
The government and the ruling parties will set an economic recovery period, beginning this fiscal year and running through fiscal 2010, to implement tax cuts. After this limited period, to secure the financial resources to realize a stable social security program, the government will carry out tax reforms in stages by the mid-2010s, with the intention of later raising the consumption tax rate.
According to the policy, the government and the ruling coalition will compile the medium-range program by the end of this year.
Items to be included in the program are:
– Taxation of individual and corporate incomes.
– Taxation of assets.
– The consumption tax.
The policy states it will specify how each tax revision item fits into the overall reform plan.
Regarding how tax cuts will be carried out, the policy states that “the government will protect people’s living from the turmoil of the global economy, giving top priority to economic recovery within three years,” emphasizing tax cuts will be a means for realizing economic recovery.
Meanwhile, the tax-system revisions, with an eye on the consumption tax hike to secure financial resources for social security, will be carried out in a phased manner and completed by the mid-2010s.
The policy said, however, that the tax revisions will take place “after an upturn in the economy while the economic climate is carefully monitored.”
Prime Minister Taro Aso has proposed developing “a society of medium welfare and medium burden” in which all people nationwide support each other, taking on a burden appropriate to the individual.
With this slogan as its fundamental principle, the policy said that through tax system revisions, the government plans to secure the resources to deal with pension, medical care, nursing care and declining birthrate issues. The revisions also aim to secure the necessary resources to increase to 50 percent the government-funded portion of national pension benefit payments.
The government likely will begin implementing tax cuts to stimulate economic recovery in the current fiscal year and continue the process until fiscal 2010.
When campaigning for the LDP presidential election, Aso said the consumption tax should be at the 10 percent level by about 2015.
Based on his idea, tax rate debates in the Diet likely will be accelerated.
On Thursday, Aso told the ruling coalition to work on the basic policy of the medium-range program, so it can specify the policy in the new economic stimulus package to be released next Thursday.
(Oct. 26, 2008)
