Hatoyama Govt Trying to Find Ways to Increase Taxes

Tokyo, April 14 (Jiji Press)--The government of Prime Minister
Yukio Hatoyama is now seeking ways to increase taxes, as it faces difficulty
in keeping his party's campaign promise of securing fiscal resources through
cuts in state spending.
As well as Deputy Prime Minister Naoto Kan, who started calling for
a tax increase in mid-March, National Policy Minister Yoshito Sengoku the
same day underlined the need for discussions for a drastic tax system
reform, including a consumption tax hike.
The ruling Democratic Party of Japan appears to be aiming to
prevent possible tax increases from becoming a major issue in the House of
Councillors election this summer. To this end, it hopes to involve the
opposition Liberal Democratic Party, which has also called for raising
taxes.
Sengoku came out on the side of consumption tax increase, saying
that the country will face financial hurdles if tax revenue remains at the
current level.
He also suggested that Hatoyama could dissolve the House of
Representatives, the lower chamber of the Diet, for a snap election before
his term ends in 2013 to raise the tax.
Immediately after becoming finance minister earlier this year, Kan
emphasized that a consumption tax hike should not come before the government
totally eliminates its wasteful spending.
But these days, he has been reiterating that even if the tax rate
is raised from the current 5 pct, the government's proper use of the
resulting revenue should improve the Japanese economy, pundits point out.
With the government's program to squeeze revenue of 12.6 trillion
yen by cutting such spending on the brink of collapse, Hatoyama may end up
changing his tax policy, they forecast.
In late April, the Government Revitalization Unit will start
screening independent administrative agencies and public interest
corporations to cut wasteful spending.
But a senior Finance Ministry official said trillions of yen of
financial resources cannot be found through the review process.
As for budget expenditures, large amounts of additional spending
will be needed to finance the DPJ's policy promises, including the full
payment of a new child allowance in fiscal 2011.
However, some DPJ members fear that the party will lose votes in
the upcoming Upper House election if it starts discussing a consumption tax
increase, saying the move is a betrayal of the public.
Trying to brush away such concerns, Kan said a tax hike will not be
a campaign issue if the both ruling and opposition camps move toward the
hike.