Japan Press Weekly

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2013 July 10 - 16 [POLITICS]

Consumption tax hike is needed because of corporate tax cuts: Gov’t official

A senior administration official has stressed the need for a consumption tax hike to make up for a loss in tax revenues caused by further corporate tax cuts.

Cabinet Secretariat Advisor Hamada Koichi on July 11 said in his speech in Nagoya City, “A consumption tax increase is inevitable at some point in the future because further corporate tax cuts, including an investment tax credit, will be made.”

The Abe government is aiming at raising the consumption tax rate from the current 5% to 8% in April 2014, and then to 10% in October 2015.

Hamada added that he will submit his proposal to the prime minister.

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Japan’s retail business leaders have expressed caution about the planned consumption tax rate increase.

The Japan Chain Stores Association recently requested the national government to postpone the consumption tax hike scheduled to be implemented in April 2014. They stated in their tax reform petition for fiscal 2014, “The consumption tax increase should be postponed until it is confirmed that the economy is pulling out of the deflation and shifting to a sustainable growth track.”

Suzuki Toshifumi, chairman of Seven & i Holdings Co., expressed concern over the continuing low level of personal consumption. He said in the June 30 issue of the Nikkei, “It is too early yet to raise the tax rate. I think it is appropriate to defer the tax increase for at least one year.”