Japan: Tax Hike Considered

July 27th, 2011
in econ_news

tsunami-11 Econintersect:  There are reports today (July 27) that the Japanese administration is considering tax hikes of ¥10.3 trillion ($127 billion) spread out over five years to help pay for the extra budget appropriations expected for the disaster relief and reconstruction in the recovery from the March 11, 2011 earthquake and tsunami.  It was reported by GEI News yesterday that the out of budget appropriations might reach as high as ¥19 trillion ($243 billion).  Today The Japan Times reported that the government estimate has risen to ¥23, more than $50 billion higher.

Follow up:

Besides raising taxes, the government is also considering cutting some previously planned expenditures and issuing reconstruction bonds. From The Japan Times:

It is also eyeing securing extra revenues of around ¥200 billion by selling its holdings in subway operator Tokyo Metro Co. and other government-owned assets, while aiming to ensure around ¥2.4 trillion over four years from fiscal 2012 by scaling down its key policy spending, including monthly child allowances.

Vice Finance Minister Fumihiko Igarashi said Monday the government is weighing selling assets including shares in NTT Corp. and Japan Tobacco Inc. to pay for earthquake reconstruction costs.

"I've already ordered officials internally to make their best efforts" to sell government assets, including equity holdings, Igarashi said at a news conference. "I don't think it would be a big sale though."

Sources:  The Japan Times and GEI News

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