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Business leaders push for phased sales tax hike

Date Posted: 2008-09-19

The nationís business leaders, concerned about paying for government pension plans with tax revenues, are calling for a graduated sales tax increase.

The Nippon Keidanren, the Japan Business Federation, wants to double the consumption tax rate to 10% over the next two years. The nationís most powerful businesses are actually seeking two things; they want the sales tax rate hiked to 10%, but at the same time want to see •2.5 trillion in income tax cuts phased in over a several years period.

The business lobby plans to make its recommendations after September 22nd, after the next prime minister forms a Cabinet and the Liberal Democratic Party holds its presidential election. It tempers its tax hike recommendation with the proviso it not affect the tax rate for everyday necessities, including food, to avoid applying additional pressures on low income households.

Fujio Mitarai, the Nippon Keidanren chairman, had proposed implementing the new tax rates on an incremental basis over a five-year period, but backed off of the delay to permit the government to achieve a balanced budget, or surplus, by fiscal year 2011. The business group has been concerned about rising social security costs, which have already increased governmentís burden from one-third to nearly 50% in the 2009 budget.

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