Japanese PM calls for comprehensive tax reform

14:51, January 04, 2011      

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Japanese Prime Minister and leader of the ruling Democratic Party of Japan (DPJ) Naoto Kan said Tuesday the government must consider comprehensive tax reform, including raising the sales tax to support the struggling economy and that he plans to create a coherent reform plan for the nation's tax system around June this year.

Speaking in his first news conference of the year, the Japanese prime minister said he wishes 2011 to be a clean sheet for Japan economically and called for further cross-party cooperation to help combat the nation's public debt which is already about twice the size of its 5 trillion U.S. dollar economy and will come under further pressure from rising welfare spending.

"The need for a discussion about social welfare and the resources required, including tax reform and raising the consumption tax, is clear to everyone," he said.

Last month, the Japanese Cabinet approved a record 92.4 trillion yen (1.11 trillion U.S. dollars) draft budget aimed at creating new jobs and kickstarting Japan's sluggish economy.

However, whilst some economists maintain that raising tax in Japan may be one way for the nation to tackle its third decade of stagnation, support for Kan and his ruling cabinet took a nosedive, leading to the DPJ's loss in July's upper house elections, after Kan previously suggested that Japan needs to raise its 5 percent sales tax to as high as 10 percent.

Naoto Kan's government also faces a rapidly aging population that is set to increasingly drain social welfare resources.

Japanese aged 65 and older make up roughly 25 percent population and the government projects that by 2050, that figure will climb to 40 percent as the numbers of young people getting married decrease and the nation's birthrate continues to decline.

Amid prior speculation and falling public approval ratings, Kan said during the nationally televised news conference that he has no plans to dissolve the House of Representatives for a general election, although he did say he will take a more proactive stance on money-tainted politics this year, hinting that the ruling Democratic Party's Ichiro Ozawa may be ousted following his indictment for political funding improprieties.

"This year, I want to overcome the problem of money in politics, " the Japanese premier said, adding that Ozawa, who challenged Kan in the DPJ's leadership election battle and lost in September, will need to focus on his own legal issues once he is indicted over the scandal involving his political funds management body.

Kan has received vociferous calls to have Ozawa leave the DPJ or resign as a lawmaker altogether from opposition parties who now have the power to block key bills from being enacted, as well as pressure from within his own party to eject the party's infamous powerbroker. Kan also said during his address that he wanted to work to decrease the burden of the U.S. military presence in Okinawa, but would stick to an agreement with Washington to relocate a controversial U.S. marine base to a less crowded part of Okinawa, Japan's southernmost prefecture, a move that has drawn the ire of local officials and citizens who maintain the facility should be removed from the island entirely.

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