ID :
197939
Thu, 07/28/2011 - 18:03
Auther :
Shortlink :
https://oananews.org//node/197939
The shortlink copeid
DPJ presses gov't to annul tax hike plan for reconstruction
TOKYO (Kyodo) - The government on Thursday began moving toward modifying its draft policy guidelines for reconstruction following the March earthquake and tsunami, after coming under pressure from the ruling Democratic Party of Japan to scrap its plan for provisional tax increases.
The Cabinet of Prime Minister Naoto Kan has been discussing the plan to secure some 10.3 trillion yen ($132.5 billion) by provisionally raising taxes for a five-year period starting next April and financing the rebuilding of devastated prefectures in northeastern Japan.
While the government wants to put the tax increase plan in the guidelines, some DPJ lawmakers argue that the government can finance public work projects by issuing bonds instead of increasing taxes.
The government hopes to finalize the guidelines, which would estimate the total cost of 10-year reconstruction and innovation projects at 23 trillion yen, at a ministerial meeting Friday.
National policy minister Koichiro Gemba said, however, that any final decision on the guidelines might be delayed until August due to the opposition from within Kan's DPJ, which could heap further difficulties on the prime minister whose leadership has been undermined since he declared in June that he would step down after achieving certain goals.
On Thursday, the members of a DPJ panel dealing with reconstruction issues agreed to call for the exclusion of the tax hike plan from the guidelines. The government plans to spend 19 trillion yen during the five years starting in the current fiscal year.
The government has already set aside 6 trillion yen under the two already passed extra budgets. It would also raise another 10.5 trillion yen by issuing ''reconstruction bonds,'' which would be serviced with proceeds from the envisaged tax hike as well as from spending cuts and sales of some state-owned assets.
It is planning to manage the emergency bonds separately from the existing conventional bonds in an attempt to maintain fiscal discipline and prevent the new bond issuance from leading to any sudden sharp rise in long-term interest rates in Japan, which would mean higher debt-servicing costs for the government.
The Cabinet of Prime Minister Naoto Kan has been discussing the plan to secure some 10.3 trillion yen ($132.5 billion) by provisionally raising taxes for a five-year period starting next April and financing the rebuilding of devastated prefectures in northeastern Japan.
While the government wants to put the tax increase plan in the guidelines, some DPJ lawmakers argue that the government can finance public work projects by issuing bonds instead of increasing taxes.
The government hopes to finalize the guidelines, which would estimate the total cost of 10-year reconstruction and innovation projects at 23 trillion yen, at a ministerial meeting Friday.
National policy minister Koichiro Gemba said, however, that any final decision on the guidelines might be delayed until August due to the opposition from within Kan's DPJ, which could heap further difficulties on the prime minister whose leadership has been undermined since he declared in June that he would step down after achieving certain goals.
On Thursday, the members of a DPJ panel dealing with reconstruction issues agreed to call for the exclusion of the tax hike plan from the guidelines. The government plans to spend 19 trillion yen during the five years starting in the current fiscal year.
The government has already set aside 6 trillion yen under the two already passed extra budgets. It would also raise another 10.5 trillion yen by issuing ''reconstruction bonds,'' which would be serviced with proceeds from the envisaged tax hike as well as from spending cuts and sales of some state-owned assets.
It is planning to manage the emergency bonds separately from the existing conventional bonds in an attempt to maintain fiscal discipline and prevent the new bond issuance from leading to any sudden sharp rise in long-term interest rates in Japan, which would mean higher debt-servicing costs for the government.
