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Japan Needs to Raise Sales Tax
World Economy

Japan Needs to Raise Sales Tax

Economy Minister Nobuteru Ishihara said Wednesday that Japan will eventually have to raise the nation’s sales tax to help pay for rising social security costs in an aging society. Speaking at a Bloomberg seminar in Tokyo, Ishihara said an increase to 10% from the current 8% won’t be enough to cover welfare payments. “We’ll gradually raise it to 12%, to 13%, to 15%, and we’d have to hold an election to seek approval from the public to do this.” In an about-turn after vowing his policies would make the economy strong enough to withstand an increase in the levy, Prime Minister Shinzo Abe said in June that he’d delay a hike until 2019. A three-percentage-point rise in the tax in 2014 sent consumption rumbling and threw the country into recession. With Japan facing persistent fiscal deficits, an increase in the tax could be required to fund a social safety net.

 

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