Timing Right For Hike In Japan’s Taxes, Says Government Tax Advisor

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

30 July 2004

Hiromitsu Ishi, the head of Prime Minister Junichiro Koizumi's advisory panel on taxation, has suggested that the timing could be right next year for an increase in the nation’s tax burden.

Presenting a tax commission report on social and economic trends, Mr Ishi suggested that income, consumption and inheritance taxes should be raised as part of the government’s wider reforms, which are aimed at boosting tax revenues and averting a future fiscal crisis brought about by the counry's ageing population.

Furthermore, Ishi believes that tax cuts introduced by a previous government four years ago should now be repealed.

“The main target was to stimulate the Japanese economy,” noted Ishi of the year 2000 cuts. “But once the economy is fully recovered, continuation of this huge amount of tax cuts cannot be rationalised."

Ishi also stuck to his controversial recommendation that the 5% consumption tax be raised to a double digit figure, a move he described will be an “inevitable requirement”.

However, his proposals are unlikely to be met with widespread support, especially after a consumption tax hike in 1997 was blamed for curtailing an economic recovery. Prime Minister Koizumi has also let it be known that he would rather resign than preside over a hike in consumption tax.

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