ID :
200938
Fri, 08/12/2011 - 18:37
Auther :
Shortlink :
https://oananews.org//node/200938
The shortlink copeid
Japan to miss key fiscal goal even with doubled sales tax: gov't
TOKYO, Aug. 12 Kyodo - The government said Friday it will miss its key fiscal rehabilitation goal set for fiscal 2020 even if it doubles the current consumption tax rate to 10 percent as planned.
Japan has set the goal of achieving a primary balance surplus by the end of the year through March 2021, which means the government can finance its policy spending, excluding debt-servicing costs, without issuing new bonds. The government aims to double the sales tax rate in stages by fiscal 2015 to secure funds to cover burgeoning social security costs.
According to an estimate, endorsed by Prime Minister Naoto Kan's Cabinet the same day, the government will fail to hit the goal, falling around 18 trillion yen ($234 billion) short. To cover the shortage, it would need to raise the consumption tax rate to around 17 percent.
Given the estimate, it is evident that the government ''must additionally reform revenue and expenditure,'' Kaoru Yosano, economic and fiscal policy minister, told reporters.
Finance Minister Yoshihiko Noda separately said that achieving a primary balance surplus by fiscal 2020 and reducing the outstanding debt thereafter is Japan's ''promise to the international community,'' calling for thorough effort to achieve the goal.
Also Friday, the Cabinet agreed on an updated medium-term fiscal spending plan that says the government will cap its budget spending minus debt costs at 71 trillion yen and new debt issuance at 44 trillion yen over three years through March 2015.
The pessimistic estimate, called a ''conservative scenario,'' assumes that the country's rate of nominal growth in gross domestic product will be at 1.5 percent to 1.9 percent until fiscal 2020.
Even under a more optimistic estimate, dubbed a ''growth scenario,'' in which nominal GDP will expand at a rate of 3.0 percent to 3.9 percent, the government believes it will still be more than 9 trillion yen short of a primary balance surplus.
Under a different goal, Japan aims to halve the primary balance deficit, which was at 6 percent of nominal GDP in fiscal 2010, by the end of fiscal 2015. The conservative estimate said it is possible to attain that goal with a doubling of the consumption tax rate.
The Cabinet Office conducted two types of calculations under both scenarios, depending on how long the government will take -- five or 10 years -- to conduct provisional tax hikes and other fiscal measures that would help secure some 19 trillion yen in funds for reconstruction work following the March 11 earthquake and tsunami.
Japan has set the goal of achieving a primary balance surplus by the end of the year through March 2021, which means the government can finance its policy spending, excluding debt-servicing costs, without issuing new bonds. The government aims to double the sales tax rate in stages by fiscal 2015 to secure funds to cover burgeoning social security costs.
According to an estimate, endorsed by Prime Minister Naoto Kan's Cabinet the same day, the government will fail to hit the goal, falling around 18 trillion yen ($234 billion) short. To cover the shortage, it would need to raise the consumption tax rate to around 17 percent.
Given the estimate, it is evident that the government ''must additionally reform revenue and expenditure,'' Kaoru Yosano, economic and fiscal policy minister, told reporters.
Finance Minister Yoshihiko Noda separately said that achieving a primary balance surplus by fiscal 2020 and reducing the outstanding debt thereafter is Japan's ''promise to the international community,'' calling for thorough effort to achieve the goal.
Also Friday, the Cabinet agreed on an updated medium-term fiscal spending plan that says the government will cap its budget spending minus debt costs at 71 trillion yen and new debt issuance at 44 trillion yen over three years through March 2015.
The pessimistic estimate, called a ''conservative scenario,'' assumes that the country's rate of nominal growth in gross domestic product will be at 1.5 percent to 1.9 percent until fiscal 2020.
Even under a more optimistic estimate, dubbed a ''growth scenario,'' in which nominal GDP will expand at a rate of 3.0 percent to 3.9 percent, the government believes it will still be more than 9 trillion yen short of a primary balance surplus.
Under a different goal, Japan aims to halve the primary balance deficit, which was at 6 percent of nominal GDP in fiscal 2010, by the end of fiscal 2015. The conservative estimate said it is possible to attain that goal with a doubling of the consumption tax rate.
The Cabinet Office conducted two types of calculations under both scenarios, depending on how long the government will take -- five or 10 years -- to conduct provisional tax hikes and other fiscal measures that would help secure some 19 trillion yen in funds for reconstruction work following the March 11 earthquake and tsunami.
