Japan sales tax bill agreement reached
18 June 2012
Posted by: SAIT Technical
Japan's main political parties on Friday reached basic agreement on a plan to double sales tax which they hope will help tackle the country's debt mountain, following months of parliamentary deadlock.
Prime Minister Yoshihiko Noda's Democratic Party of Japan (DPJ) and the main opposition Liberal Democratic Party (LDP) found common ground over proposed reforms to social security and tax systems, party officials and local media said.
Noda, who has staked his premiership on hiking sales tax from the current five percent in a bid to partially plug Japan's gaping fiscal hole, now has to convince a wayward wing within his own indisciplined party.
The premier is also looking to solidify the deal with backing from the second largest opposition party the New Komeito, although he does not technically need their votes.
The agreement hammered out Friday will see sales tax going up to 10 percent by 2015, with provisions made for those on low incomes, party officials said.
A new pension system that would have guaranteed a minimum monthly allowance will be scrapped.
The DPJ leadership now hopes to push revised bills through the lower house, which it controls, by Thursday next week and send them to the upper house, which it does not, soon after that.
Noda has warned that the future of the world's third-largest economy rests on tackling its hulking public debt, which at more than double the GDP, is proportionately the world's largest, while paying for an increasingly expensive social welfare system.
Opponents of the tax rise - including a significant section of the DPJ - say any increase in household bills would derail Japan's uncertain economic recovery.