Japan eyes sales tax rise to pay for post-quake rebuild

Japan eyes sales tax rise to pay for post-quake rebuild
# 19 April 2011 14:52 (UTC +04:00)
Bakı - APA-Economics. Japanese consumers may have to help foot the reconstruction bill after last month’s earthquake and tsunami caused $300 billion of damage, further burdening the hugely indebted economy, Reuters reported.

It would be the first increase since 1997, though a sales tax hike had been the subject of fierce political debate before the earthquake struck as one way for Japan to dig itself out of its massive debt.

The government is considering raising the tax by 3 percentage points to 8 percent when the new fiscal year starts next April, the Yomiuri newspaper reported.

The government hopes to avoid issuing new bonds to fund an initial emergency budget, expected to be worth about 4 trillion yen ($48 billion), due to be compiled this month.

But bond issuance is likely for subsequent extra budgets which will only make it harder for Japan to rein in its debt, already running at twice the size of the $5 trillion economy.
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