Japanese PM draws fire from opposition parties over tax hike plan

15:39, June 22, 2010      

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Japanese Prime Minister Naoto Kan came under fire Tuesday from opposition parties for proposing to raise the nation's consumption tax as political bloc's jostle for public opinion points, ahead of upper house election pegged for July 11.

In a nationally televised debate involving the leaders of nine parties and held at the Japan National Press Club in Tokyo just days before official campaigning is set to begin, the main opposition Liberal Democratic Party (LDP) chief Sadakazu Tanigaki chastised Kan, who is also president of the ruling Democratic Party of Japan (DPJ), for raising the thorny issue of a tax hike, without first doing his due diligence.

Tanigaki, at the outset of the debate admonished the new leader for not discussing the potential tax hike within his own party and for not specifically addressing the issue in his policy declaration to parliament.

The ruling DPJ in its manifesto revealed on June 17 pledged to achieve annual economic growth of more than 2 percent in real terms and launch a bipartisan overhaul of the tax system, only hinting at the DPJ's plans to raise the nation's 5 percent sales tax rate in the future.

Thereafter, Kan, who took office earlier this month, said he wishes the government to embark on cross-party discussions on raising sales tax in line with the LDP's proposal to double the current 5-percent tax rate, but announced that any changes would not come into effect for "at least two or three years," as the nation must first achieve fiscal and economic stability.

Kan, himself a former finance minister and known as a "fiscal hawk" under his predecessor Yukio Hatoyama, for his part maintained Tuesday that the government must reduce state debt or risk losing credibility from the market.

Kan raised the example of Greece, whose bond interest rates shot up due to perceptions it would have trouble settling its sovereign debt.

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