Posted by WARREN MOSLER on June 21st, 2011
You’d think they’d know better by now:
Noda Pledges to Build Consensus on Doubling Japan Sales Tax
By Toru Fujioka
June 21 (Bloomberg) — Japanese Finance Minister Yoshihiko Noda said he wants to work on building a consensus to double the nation’s 5 percent sales tax as his country tries to contain the largest debt burden in the world.
Government and ruling party officials have decided to postpone approving a panel recommendation to raise the consumption tax to 10 percent by fiscal 2015 to pay for social welfare, the Yomiuri newspaper reported today, without citing where it obtained the information.
“The issue is whether we can get approval for the core elements of our proposal,” Noda said at a press conference in Tokyo today, when asked whether the reference to doubling the sales tax could be removed to win approval for the recommendations. “We should make efforts to gain an understanding” for the recommendations, he said.
Prime Minister Naoto Kan, who chaired panel charged with examining social welfare, was scheduled to release a blueprint for tax policy this month to keep the budget sustainable.
Moody’s Investors Service, Standard & Poor’s and Fitch Ratings have all warned that Japan risks a downgrade in its credit grade if it fails to push through changes.
A record earthquake, nuclear crisis and political wrangling within Kan’s ruling Democratic Party of Japan have complicated his efforts to restore Japan’s fiscal health. The nation’s debt burden is about 200 percent of gross domestic product, a load that will come under more pressure as the population ages.