IMF calls on Japan to raise consumption tax
Source: Financial Times
Japan has come under renewed pressure to tackle its huge public debt with the International Monetary Fund calling on the government to raise the national consumption tax to at least 15 per cent.
Speaking in Tokyo, David Lipton, first deputy managing director of the IMF, said Japan’s “immediate priority” should be the passage of tax and social security reform that “would bolster confidence and help create a more conducive environment to monetary easing”.
In its annual review of the Japanese economy, the IMF said the ruling Democratic party’s plan to double the consumption tax to 10 per cent was an important step towards fiscal consolidation, but that “reducing debt to sustainable levels will require further measures”.
The IMF suggested that Japan cut its corporate tax rate beyond the current planned reduction to 35 per cent. It also recommended broadening the personal income tax base and raising the pension retirement age. It said Japan should also claw back pension benefits from wealthy retirees to cut social security spending.
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IMF can stick that proposal where the sun don't shine. Raising the regressive consumption tax, especially doubling it to 10%, can only hurt the economy, like the introduction of the tax did in 1989, and the raising of the rate to 5% did in 1998. They just want to take that much more disposable income away from Japanese consumers, whose average annual income has already been taking a hit. 
