National News

Finance Minister Naoto Kan plans to accelerate a possible consumption tax hike following the scheduled passage of the fiscal 2010 budget at the House of Representatives next month, it has been learned.

Kan appeared on a Fuji Television Network's Sunday program and said that the Government Tax Commission will start discussing tax revisions as early as next month, including a potential increase in the consumption tax.

"We are planning to begin full-scale discussions regarding income and corporate taxes, and may also address consumption and environment taxes in March," Kan revealed during the show. Initial plans had slated debate for next year.

"It's the basic policy of the Hatoyama administration not to raise (consumption) tax during its term of office. If we are to introduce major tax reform, we must seek public acceptance," Kan told reporters after the program. Kan is likely to court public opinion by preparing taxation and social security revisions before the next House of Representatives election.

"We need to discuss whether the current tax system, which only generates revenues of 36 trillion yen, is appropriate," Kan explained, adding that he had already obtained the Prime Minister's agreement on his initiative a few days earlier.

Minister of State for National Policy Yoshito Sengoku told the press the same day that he had always encouraged the discussion on the matter, but also pointed out the complexity of the situation.

"Consumption tax is linked to pension benefits, medical services and nursing care. It's not a simple task," Sengoku said.

Meanwhile, Liberal Democratic Party leader Sadakazu Tanigaki criticized the move during a lecture meeting in Hakone, Kanagawa Prefecture, on Sunday, saying: "They are denying what they've pledged in their own manifesto. They said a consumption tax hike won't be necessary if only wasteful government spending is cut back. Kan's remark is all but a confession of their inability to keep their promises, and we cannot accept it."

During the House of Representatives Budget Committee session on Monday morning, Kan stressed the government must seek public approval if drastic tax reform is to be implemented, and that it will not increase the consumption tax before the next general Lower House election.