Japan's sales tax hike may come in 2-3 years' time, says Kan+

TOKYO, June 21 Kyodo -
Prime Minister Naoto Kan said Monday his government may raise Japan's
consumption tax rate from the current 5 percent in order to restore the
nation's fiscal health, though not for at least two or three years.
The government will try to speed up debates on the issue involving both the
ruling and opposition camps after next month's upper house election, while
seeking to ensure the tax hike would not harm those on lower incomes, he said.
''I think it may take two or three years at least'' to prepare for a possible
tax hike, Kan said at a press conference. ''I want to start full-fledged
debates on the consumption tax issue after the House of Councillors election.''
In the run-up to the July 11 election, major parties are coming under scrutiny
over their pledges on such issues as how to finance Japan's swelling social
security costs against the backdrop of an aging population, declining
birthrates and falling tax revenues due to the economic slowdown.
Kan reiterated that his ruling Democratic Party of Japan is using as a
''reference'' the main opposition Liberal Democratic Party's proposal to double
the sales tax rate to 10 percent.
Debates on such a tax increase must include consideration of measures to
prevent lower-income earners from being forced to bear additional burdens, Kan
said, suggesting the introduction of lower rates on designated products as well
as of a refund system for those in certain income brackets.
Kan, who took office earlier this month, reiterated his pledge to enhance
Japan's economy, finances and social security system together.
While underscoring the need to reduce the country's vast public-sector debt, he
said the government will allocate resources in industries with growth
potential.
Japan will pursue economic growth and fiscal discipline at the same time, said
Kan, who added he will ''show the way Japan will take'' at the Group of 20
summit of government heads scheduled for this weekend in Toronto, Canada.
The sustainability of public finances is a key issue at the summit, Kan said,
citing recent national debt problems in Europe and subsequent confusion in
global financial markets, which he said are ''largely affecting the world
economy.''
Kan said he hopes some countries will see the envisaged Japanese measures as an
example for their own future policies.
The prime minister expressed his hope that he could enhance personal ties of
trust with U.S. President Barack Obama and reaffirm the importance of the
Japan-U.S. relationship when they hold their first face-to-face meeting in
Canada since Kan took office.
Kan is likely to meet Obama on Sunday on the sidelines of the summit of G-20
advanced and major emerging economies, government sources said.
Kan said Tokyo will respect a recent Japan-U.S. agreement on the relocation of
the U.S. Marine Corps' Futenma Air Station within Okinawa Prefecture.
But he also said it is crucial to consider how to ease the burden on people in
the island prefecture, which hosts a large part of U.S. forces in Japan. ''Our
position is one of asking the United States for its cooperation'' to that end,
Kan said.
==Kyodo
2010-06-21 23:17:58