ID :
12264
Fri, 07/11/2008 - 22:25
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Shortlink :
https://oananews.org//node/12264
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Nukaga eyes double-digit sales tax in mid-2010s to support elderly
TOKYO, July 11 Kyodo - Finance Minister Fukushiro Nukaga said Friday he believes Japan's consumption tax rate should be raised in two or three stages from the current 5 percent to reach a double-digit level in the mid-2010s to finance ballooning social security costs to support aging baby boomers.
''Unless the consumption tax rate reaches a double-digit level by the time the baby boomers reach 70 or older, it cannot be called a stable revenue source. We have to fully discuss that matter,'' Nukaga said in an interview with Kyodo News.
''Around the time when baby boomers turn 75 years old in 2022, the fiscal burden will become heaviest. We should provide a sense of security to the Japanese people by presenting an outlook for the future direction'' of the country's fiscal conditions, the minister said.
Nukaga referred to estimates by the Health, Labor and Welfare Ministry that social security benefit payments in Japan will jump to 141 trillion yen in fiscal 2025 from about 90 trillion yen at present.
He pointed out that social security costs will expand faster than the nation's expected economic growth rate and that cuts in outlays and the abolition of wasteful spending alone will not generate enough financial resources to deal with the situation.
Comparing the government campaign to eliminate wasteful spending to ''housecleaning,'' Nukaga said, ''From a commonsense viewpoint, doing away with wasteful expenditures does not concern the fundamental debate on the fiscal system. It is a normal duty.''He said revenues secured by the campaign should be used to trim Japan's long-term debts, which are expected to amount to 148 percent of gross domestic product on March 31, 2009 at the national and local governments. Japan's debt-to-GDP ratio is the worst among developed countries.
The minister stressed that the government will discuss the possibility of raising the sales tax in comprehensive tax reform talks slated to start in the fall, but warned that the actual timing of the rate hike should be subject to domestic economic conditions.
''Whenever we ask the people to shoulder increased burdens, we have to be careful about the entire macroeconomic conditions,'' Nukaga said.
He also said when the consumption tax rate hits double digits, measures to alleviate the burden on people with low incomes can be introduced. In some countries, the tax rate is reduced on consumption of food and other everyday goods.
As for the conflict between ruling party politicians who are seeking to boost tax rates and those who are negative about the idea and instead advocate thorough cuts in government spending, Nukaga said policies pursued by both groups are necessary in order to achieve stable economic growth and fiscal rehabilitation.
''We have to play a baseball game that involves all members,'' he said, adding that policies advocated by only one of the two groups will not be able to achieve the goal of securing economic growth while dealing with surging social security costs.
''Unless the consumption tax rate reaches a double-digit level by the time the baby boomers reach 70 or older, it cannot be called a stable revenue source. We have to fully discuss that matter,'' Nukaga said in an interview with Kyodo News.
''Around the time when baby boomers turn 75 years old in 2022, the fiscal burden will become heaviest. We should provide a sense of security to the Japanese people by presenting an outlook for the future direction'' of the country's fiscal conditions, the minister said.
Nukaga referred to estimates by the Health, Labor and Welfare Ministry that social security benefit payments in Japan will jump to 141 trillion yen in fiscal 2025 from about 90 trillion yen at present.
He pointed out that social security costs will expand faster than the nation's expected economic growth rate and that cuts in outlays and the abolition of wasteful spending alone will not generate enough financial resources to deal with the situation.
Comparing the government campaign to eliminate wasteful spending to ''housecleaning,'' Nukaga said, ''From a commonsense viewpoint, doing away with wasteful expenditures does not concern the fundamental debate on the fiscal system. It is a normal duty.''He said revenues secured by the campaign should be used to trim Japan's long-term debts, which are expected to amount to 148 percent of gross domestic product on March 31, 2009 at the national and local governments. Japan's debt-to-GDP ratio is the worst among developed countries.
The minister stressed that the government will discuss the possibility of raising the sales tax in comprehensive tax reform talks slated to start in the fall, but warned that the actual timing of the rate hike should be subject to domestic economic conditions.
''Whenever we ask the people to shoulder increased burdens, we have to be careful about the entire macroeconomic conditions,'' Nukaga said.
He also said when the consumption tax rate hits double digits, measures to alleviate the burden on people with low incomes can be introduced. In some countries, the tax rate is reduced on consumption of food and other everyday goods.
As for the conflict between ruling party politicians who are seeking to boost tax rates and those who are negative about the idea and instead advocate thorough cuts in government spending, Nukaga said policies pursued by both groups are necessary in order to achieve stable economic growth and fiscal rehabilitation.
''We have to play a baseball game that involves all members,'' he said, adding that policies advocated by only one of the two groups will not be able to achieve the goal of securing economic growth while dealing with surging social security costs.
