Japan PM says he staking all on doubling sales tax

Associated Press
Japan's Prime Minister Yoshihiko Noda speaks during a press conference at his official residence in Tokyo, Friday, March 30, 2012.  Japanese Prime Minister Noda vowed to stake his political career to achieve the sales tax increase Friday as his Cabinet endorsed a legislation to help counter the country's fiscal deficit.  His pledge comes hours after his Cabinet endorsed a bill desgined to raise the 5 percent sales tax in two stages, to 8 percent in 2014 and 10 percent by 2015. (AP Photo/Shizuo Kambayashi)
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TOKYO (AP) — Japanese Prime Minister Yoshihiko Noda said he is staking his political career on doubling Japan's sales tax to avoid a European-style debt crisis after his Cabinet on Friday endorsed the unpopular reform.

The Cabinet gave its approval to a bill that would raise the 5 percent sales tax in two stages — to 8 percent in 2014 and to 10 percent by 2015. The bill's fate is still uncertain because it has to be debated and voted on in parliament to be enacted into law.

Noda said raising the sales tax is necessary to help ease revenue shortfalls caused by the country's aging population and shrinking work force. Japan is the world's fastest aging country.

With Japan's national debt already twice the size of its economy, Noda and his allies have warned that urgent steps are needed to prevent a crisis similar to the one gripping Europe.

"The step is for the future of the people and the country and cannot be avoided or put off," Noda told a news conference. "I will stake my political career to achieve the goal."

The plan is unpopular with the public and opposed by opposition lawmakers as well as some within Noda's own Democratic Party of Japan.

The Cabinet approval of the bill rattled the ruling party and its coalition partner, the People's New Party. Several ruling party lawmakers resigned from top positions in the education, health and internal ministries in protest. A veteran politician who heads the People's New Party has threatened to break away.

Noda said a sales tax increase would be the fairest and most stable source of revenue to create a society that promises "a better tomorrow than today."

He said tax breaks and other measures would cushion the impact of the sales tax hike on low-income citizens. The maximum tax rate for high income earners would also be raised.

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