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Japan: 10 Percent Consumption Tax Eyed to Cover Costs for Elderly
Mainichi Daily News
June 17, 2003 Japan - The government should double the 5-percent consumption tax
and trim tax breaks for the elderly to cover the ballooning costs of
Japan's aging population, an expert panel said Tuesday. The government's Tax Commission, which advises Prime Minister
Junichiro Koizumi, made the drastic proposals in a report titled,
"Tax System for the Declining Birthrate and Aging Population." The triennial report said that the consumption tax should be hiked
to "10 percent or more" in the future because the government
needed to "construct stable revenue structures to smoothly provide
public services such as welfare programs." As a tax hike proposal can be a major political hot potato, Koizumi
tried to calm down people's uneasiness soon after he received the report
from the commission. "I won't try to hike the consumption tax during my tenure as
prime minister," Koizumi said. "The person who takes over from
me will have to do it." The report also said that several rates of consumption tax could be
available to prevent a flat rate consumption tax from becoming a heavy
burden on low-income earners. The report recommended a lower rate on general foodstuffs. If the consumption tax rate is hiked from 5 percent to 10 percent,
the Japanese government will receive an additional 12.5 trillion yen in
revenue. However, observers say the government must trim its own costs and
explain how revenue from the tax hike will be spent to cover increasing
welfare costs. Another
proposal made in the report, trimming tax breaks for the elderly is also
controversial. For example, their pensions have long been almost tax-free.
But the report proposed that a hefty tax be imposed on their pension if
they receive salaries or make income from their assets. Copyright
© 2002 Global Action on Aging |
