Japan seeks possible sales tax increase

JAPAN’S Prime Minister Naoto Kan yesterday renewed his call for tax reform including a possible doubling of the sales tax to rein in Japan’s huge debt, as ratings agency Fitch warned the country needed a credible fiscal reform plan.

Support for Kan’s new government has fallen since he floated the idea of raising Japan’s five per cent sales tax, surveys released yesterday showed as his party heads into a 11 July upper house election it needs to win to avoid policy deadlock.

But while voters appear divided over the need for a sales tax hike, Kan’s Democratic Party – which swept to power last year promising change – kept its lead over its main opposition rival.

“It’s not necessary to mention the example of Greece but when fiscal collapse occurs, the livelihoods of many people go bust and the social security system collapses,” Kan said.