Business circles' consumption tax-hike scenario revealed

Business circles in Japan are seeking to increase the consumption tax rate to 10 percent from the present five percent by 2007 at the latest, Akahata of November 22 reported.

According to a source close to the Japan Business Federation (Nippon Keidanren or JBF), the scenario the business world has drawn up includes all-out preparations for a tax rate increase starting in summer 2005, the year in which a national election is not expected, and the bill to raise the tax rate will be passed in the spring of 2006 with a view to raising the rate to 18 percent after that.

Prime Minister Koizumi Jun'ichiro has so far stated he would not increase the consumption tax rate in his term but would promote discussions. A JBF executive said that this is taken to mean that he will prepare everything for implementing a future tax rate increase.

The JBF already explained to the Democratic Party of Japan about this scenario in a DPJ tax issue panel on November 19. As DPJ Leader Kan Naoto, eager to receive donations from the JBF, hinted that the consumption tax rate might be increased to around ten percent in the future, the JBF expects the DPJ to take a lead in pushing for an increase in the consumption tax rate.

The JBF in evaluations of political parties on attitudes towards a consumption tax rate increase rated the Liberal Democratic Party and the DPJ "B (Good)" and gives "E (Very bad)" to the Japanese Communist Party which is firmly opposed to a consumption tax rate increase. (end)