Chief cabinet secretary says consumption tax rate increase may be imposed in FY 2007

Chief Cabinet Secretary Hosoda Hiroyuki at a new conference on July 29 expressed an understanding that it is possible for a consumption tax rate increase to take place in fiscal 2007.

Hosoda stated that decision-making on a consumption tax rate increase before Prime Minister Koizumi Jun'ichiro's term of office expires in September 2006 does not contradict the prime minister's pledge for no consumption tax rate increase under his government.

The ruling Liberal Democratic and Komei parties with the opposition Democratic Party of Japan basically share the view that the consumption tax rate should be increased in FY 2007.

The first meeting of an advisory panel on social services scheduled for July 30 will discuss a consumption tax rate increase to fund pensions.

In reporting on Hosoda's statement, Akahata of July 30 referred to the Japan Business Federation representing the business sector in the government advisory panel and to the JBF scenario concerning a 10 percent consumption tax rate in FY 2007 with a later increase to 18 percent.

Akahata made clear that consumption tax revenue in the past was offset by corporate tax cuts, being of little help for welfare or social services budgets. It said that the planned consumption tax increase will also be used to reduce the corporate tax and insurance burdens.

Akahata calls for developing a fully-fledged movement to frustrate the maneuvers for a consumption tax increase, stating that 52 percent of respondents to an NHK opinion poll opposed a consumption tax rate increase to fund pensions. (end)

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