Finance minister suggests consumption tax rate increase from 2004

The finance minister has hinted that a consumption tax rate increase may be necessary in or after 2004.

In answer to a Japanese Communist Party member in an Upper House committee meeting on May 24, Finance Minister Shiokawa Masajuro said that a consumption tax increase will serve as a major source of a tax revenue increase.

He said that in the next one or two years the government will have to curb national bond issuance under the Koizumi Cabinet's "structural fiscal reform" policy. But after that, he said, it will be necessary to balance the budget possibly through a consumption tax increase.

Ikeda Takayoshi, JCP Upper House member, said that the most appropriate way to achieving the fiscal structure reform and the nation's economic recovery at the same time is to cut the consumption tax rate because this will help increase personal spending.

During the question and answer session, Shiokawa denied rejected any idea of cutting public works projects.

Pointing out that there is no need to continue spending 50 trillion yen on public works projects by central and local governments, Ikeda insisted that unless the total budget allocation for these projects is cut, it will be impossible to reconstruct the national finance. (end)