Parliament Must Decide On Consumption Tax, Says Ishi

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

08 October 2003

Hiromitsu Ishi, chairman of the Japanese Government's Tax Commission and firm advocate of a hike in the nation's consumption tax has said that the foundations are mostly in place for the tax to be increased, although he has stressed that the final decision rests with parliament.

After completing a long term review of the Japanese tax system, Ishi recommended that consumption tax be raised from its current level of 5% to at least a double digit figure to absorb the cost of the county's welfare and pension system, which is growing rapidly as the nation's population ages.

However, recently re-elected Prime Minister Junichiro Koizumi has consistently expressed opposition to such a measure whilst he remains in office saying he would rather resign than increase taxes. However, he has announced that he supports the idea of a debate on the issue in the meantime.

A recent survey undertaken by the Japanese Finance Ministry in four cities has suggested that there is less opposition to the idea of a higher consumption tax than Koizumi fears. It found that over half of those polled would support the idea of paying more tax if the revenue was ploughed back into the nation's welfare and pension system. This result surprised Ishi, who said that the figure "was much higher" than he expected.

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