The controversial issue of sales tax was once again visited by the Japanese government yesterday after Finance Minister Sadakazu Tanigaki indicated that an increase in the levy was likely as part of the country’s package of long term fiscal reform
“I think it's important (for the government) to have a debate asking for consumption tax (increases) from 2007," Tanigaki told a parliamentary fiscal affairs committee, adding that the government is hoping that tax revenues will match expenditure by the early 2010s.
The consumption tax is currently levied at a rate of 5%, although some, including the head of the governmental tax reform panel, have controversially suggested hiking the tax up to between 15% and 20% to help pay for Japan’s future social security costs.
After a meeting with the tax panel, Tanigaki revealed that wider tax reform should begin in fiscal 2007, although no timetable has been set for an increase in the sales tax.
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