Fukuda eyes consumption tax hike, predicts up to 17% by 2025

To keep Japan’s medical and elderly care at current levels, a consumption tax raise up to 11-17%, up from the current 5% may become necessary, the Cabinet announced Wednesday at a Council on Economic and Fiscal Policy briefing, the Asahi Shimbun reports.

The Council predicted the price tag on upholding medical and elderly care will have come to some 14-31 trillion yen in necessary tax increases by the fiscal year of 2025. Chief Cabinet Secretary Nobutaka Machimura and Kaoru Yosano, chairman of the LDP’s taxation commitee has also expressed support of a tax raise in order to sustain the Japanese welfare system.

“We cannot allow ourselves to cut down on social security, even if we are unable to keep up with the economical situation,” Prime Minister Yasuo Fukuda said at the briefing. “It has been decided sine June, by the Abe Cabinet, that we would look into a possible tax raise.“

“I don’t think there is anybody who thought we would be able to keep the consumption tax at 5%, in the long run,” LDP Chief Cabinet Secretary Machimura commented at the same press conference.

Consumption tax was first introduced in Japan in 1988 during Noboru Takeshita’s Cabinet, initially at 3% but brought up to the current 5% in 1997. Former Prime Minister Shinzo Abe hinted before the July Upper House election that a consumption tax raise might become necessary in the next mandate, but was criticized for refusing to give any concrete answers and being evasive on the issue .

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One response to “Fukuda eyes consumption tax hike, predicts up to 17% by 2025”

The taxman cometh, Oct 23 at 8:01 pm :

[…] The word on the tax front is that the Fukuda cabinet is floating the idea of raising the Japanese consumption tax from the current 5% to somewhere in the range of 11% to 17 %. To keep Japan’s medical and elderly care at current levels, a consumption tax raise up to 11-17%, up from the current 5% may become necessary, the Cabinet announced Wednesday at a Council on Economic and Fiscal Policy briefing, the Asahi Shimbun reports. […]