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Japan's consumption tax is political problem

07-13-2010 08:35 BJT

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Japan's government is facing a daunting task to reduce debt. And it's best solution, increasing the consumption tax, has backfired.

Increasing the consumption tax, about which Naoto Kan confronted much objection, isn't a new plan. Several previous prime ministers also considered levying a higher consumption tax, but their efforts all ended in failure.

Analysts say Kan resorted to raising the consumption tax because of the overwhelmingly large national debt. Japanese voters are worried about the government's capacity to pay their pension and medicare, so raising taxes seems the most effective way to solve the current debt problem.

But a higher consumption tax will also affect Japanese citizens. Experts say Kan needs to provide a better explanation for raising the consumption tax, or he could well be challenged for the leadership.

Editor:Xiong Qu |Source:

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