Japanese Finance Minister Calls For Fiscal Reform

by Mary Swire, Tax-News.com, Hong Kong

22 September 2004

Japanese Finance Minister Sadakazu Tanigaki told the governmental Tax Commission yesterday that fiscal reform is crucial for sustaining economic growth, suggesting that future tax hikes may be inevitable.

Addressing the first meeting of the Tax Commission since May, Tanigaki reportedly told panel members that fiscal reform “is an extremely effective way to sustain economic growth."

A prolonged period of economic stagnation has led to a massive increase in the nation’s debt, exacerbated by flagging tax revenues which now only cover half of all government spending.

Tanigaki noted that the government must reform both national spending and revenue to achieve balanced reform, and hinted that future tax hikes will be needed to ensure ballooning social security costs are met.

The Finance Minister’s comments reflect a growing acceptance within Japan that tax hikes are seemingly inevitable. Last week, Japan’s most influential business group Nippon Keidanren added weight to the argument by arguing for an increase in consumption tax to 15% to avert a future national debt crisis.

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