Sales tax hike must come with lower rates on daily goods: Kan
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Posted 6/21/10 , edited 6/21/10
Sales tax hike must come with lower rates on daily goods: Kan

Monday 21st June, 06:26 AM JST


Prime Minister Naoto Kan said Sunday that any rise in the consumption tax rate must be accompanied by lower tax rates for daily goods and refunds for people on low incomes.

In street speeches in Tokyo, Kan stressed the necessity of raising the sales tax rate to fund social security, saying, ‘‘The question is whether Japan can continue expanding its debt. I expect you to determine if we should cover (social security costs) with debt or with tax revenues by looking into the future of Japan 10 years or 20 years from now.’‘

‘‘In a bid to redress the regressive character of consumption tax, I’m willing to engage in discussions with the opposition bloc on the assumption that we will introduce lower tax rates and refunds of the tax money’’ in raising the sales tax rate from the current 5%, Kan, also head of the ruling Democratic Party of Japan, said.

Kan said after assuming the post of prime minister that the main opposition Liberal Democratic Party’s proposal of doubling the current rate would be ‘‘one of the references’’ in considering a hike.

In a sign of the heated debate over the sales tax four days before the start of official campaigning for the upper house election, LDP chief Sadakazu Tanigaki criticized Kan’s remarks, telling a meeting in the city of Akita, ‘‘The prime minister has plagiarized the answer sheet compiled by the LDP.’‘

Meanwhile, DPJ Secretary General Yukio Edano told a political discussion program on NHK that his party will use revenues from the consumption tax for social security. ‘‘The revenues from the consumption tax will be basically allocated for social security,’’ he said.

With regard to a possible hike in the rate, Edano said, ‘‘To make up for a shortfall of around 10 trillion yen in revenues for social security, we will need about a 5-point hike.’‘

The DPJ did not specify when or how much the sales tax would be raised in its written election pledges publicized Thursday.

Tadamori Oshima, secretary general of the LDP, which opposes the DPJ’s big-budget election pledges made during the House of Representatives election last year, criticized Kan’s proposal to conduct a cross-party study on tax reform before clarifying his stance.

The LDP is watching how the DPJ-led government will change its spending commitments, he said on the same TV program, adding, ‘‘Until the DPJ clarifies its position, we’re not up for discussion on tax reform.’‘

The LDP has repeatedly said that the DPJ should abandon such policies or it would face the need to raise the tax rate to more than 10%.

Yoshihisa Inoue, secretary general of the New Komeito party, said it amounted to ‘‘betrayal’’ that the DPJ had proposed discussions on a consumption tax hike following the replacement of its leader after nine months, referring to the abrupt resignation of former Prime Minister Yukio Hatoyama.
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