TAX NEWS - 2010

Japan Tax: Kan Wants To Start Cross-Party Debate On Sales Tax This FY

TOKYO -- Japan's prime minister said Tuesday he hopes to begin a discussion with other political parties on a sales tax hike this fiscal year to reach a conclusion on the matter as soon as possible.

"If possible, I would like to start an all-party discussion within this fiscal year -- in other words, by the end of March 2011," Prime Minister Naoto Kan said during a debate among party leaders.

The prime minister recently suggested he could lift the nation's 5% sales tax rate above 10% over time. Several ruling party lawmakers have expressed criticism, however, that consumption tax hikes are unpopular with voters as the government prepares for Upper House elections July 11.

Kan may also have to fight to win the cooperation of opposition parties in entering into such a discussion, as most are against raising the sales tax rate in conjunction with his ruling Democratic Party of Japan.

Sadakazu Tanigaki, leader of the main opposition Liberal Democratic Party, expressed his reluctance to join the debate, saying the DPJ should first admit its economic and fiscal policies are "unachievable."

The LDP has criticized the DPJ for pledging to restore fiscal order while implementing costly domestic spending plans.