Japan cabinet approves tax hike plan
Japan: Japan's cabinet on Friday approved a plan to double sales
taxes as part of the government's move to rein in public debt as the
rapidly ageing nation faces rising social welfare costs.
If agreed by parliament the package of reforms will see consumption
tax rise to 8.0 percent in April 2014 and to 10 percent in October 2015
from the current 5.0 percent. Finance Minister Jun Azumi told reporters
that the government planned to submit related bills to parliament in
March.
But the legislation is expected to face a rocky road as opposition
parties, as well as some lawmakers in the ruling Democratic Party of
Japan, are against it. The opposition bloc controls the upper house of
parliament. Prime Minister Yoshihiko Noda has warned the future of the
world's third-largest economy depends on reversing the rising public
debt, arguing Japan has "no time to spare" in reducing its fiscal
burden.
With burgeoning pension and social security costs in a country where
the population is growing older and shrinking, only around 40 percent of
what the government spends is currently made up from taxes.
The rest is financed from borrowing, leaving debt at more than double
the country's gross domestic product, an eyewatering ratio that dwarfs
troubled Greece and will only grow unless more tax revenue is raised or
spending is cut, analysts warn. AFP |