Gov't, ruling party finalizing consumption tax hike plan
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Posted 6/20/11 , edited 6/20/11

The government began finalizing Monday a plan to raise Japan’s consumption tax to help finance the country’s swelling social security costs under a benchmark reform initiative taken by Prime Minister Naoto Kan.

Cabinet ministers and senior lawmakers from his Democratic Party of Japan are expected to agree on a set of reform plans being discussed at a time when the population is aging and putting an increasing strain on public finances, before submitting related bills to the Diet.

The plans would be based on proposals recently made by a government panel on welfare reforms, including doubling the sales tax rate to 10% in stages by the end of the year through March 2016.

Kan has repeatedly said he wants the government and the ruling party to reach a consensus over the draft reform package on Monday, which would also refer to a hike in income and inheritance taxes for wealthier people, a rise in monthly pension payments to those with an annual income of less than 650,000 yen, and a reduction in such payments to recipients with an income of 10 million yen or more.

The possible agreement could be delayed, however, as some lawmakers remain opposed to any idea of imposing additional burdens on voters.

There is also criticism that the party should discuss the issue from scratch under a new leader to succeed Kan, who has announced his readiness to resign after he achieves certain progress in rebuilding the northeastern region devastated by the earthquake and tsunami in March.
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