FOCUS: Further Fiscal Reforms Seen Inevitable after Tax Hike
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Tokyo, Oct. 16 (Jiji Press)--Japan's Prime Minister Shinzo Abe aims to prop up personal spending and boost the nation's stagnant birthrate by using part of revenue from the upcoming consumption tax rate hike for measures to support families raising children.
Further reforms in government spending and revenue are inevitable, however, since it will be very difficult to cover ballooning social security costs reflecting the rapidly aging population with the tax rate increase alone, analysts said.
On Monday, Abe clarified his determination to go ahead with the tax increase to 10 pct from the current 8 pct in October 2019 as planned, after the 2-percentage-point rate hike, originally slated for October 2015, was postponed twice.
The tax hike is expected to increase revenue by about 5.6 trillion yen. The government initially planned to use some 4 trillion yen out of the additional revenue to curb the issuance of deficit-covering bonds and the remainder for beefing up social security measures, mainly for elderly people.
But after the consumption tax was raised to 8 pct from 5 pct in April 2014, Japan's gross domestic product fell back in inflation-adjusted real terms in the fiscal year that ended in March 2015.
[Copyright The Jiji Press, Ltd.]