Japanese Ministers Shuffled in Tax Row

June 5, 2012 Taxation in Japan

Japanese Ministers Fired in Tax RowTOKYO – In hopes of garnering more approval for the proposed hike to the country’s sales tax, the Prime Minister of Japan has taken drastic action and shuffled several government Ministers to appease demands from the main opposition party.

On June 4th the Prime Minister of Japan Yoshihiko Noda dismissed the country’s Defense Minister, Transport Minister, Farming Minister, Justice Minister, and Minister for Financial Reform in an effort to placate the opposition party and smooth the way for an agreement on the issue of raising the rate of the national sales tax. The opposition Liberal Democratic Party (LDP) has been calling for the sacking of the five ministers over allegations of misconduct and inexperience.

The Prime Minister hopes that the removal of the Ministers will persuade the LDP to support the proposal to raise the country’s sales tax from 5 percent to 10 percent by the end of 2015. The bill to implement the rate hike will be voted on by the end of the current parliamentary session on June 21st.

According to the Prime Minister, the hike is needed in order to raise greater revenues for the reconstruction of earthquake damaged areas of the country and to pay the spiraling costs of Japan’s superannuation system. Several international organizations have also come forward in support of the tax rise, saying that the measure is necessary to ensure that the country’s national debts do not rise beyond the current level of 200 percent of GDP. However, the LDP claims that the first step to addressing Japan’s economic situation should not be to raise taxes but to cut wasteful government spending and to encouraging economic growth.

Political analysts in Japan have explained that the Prime Minister is appealing to the opposition parties as he has not yet gathered enough support for the tax rise amongst members of his own party, the Democratic Party of Japan (DPJ), and will need to win the backing of the LDP to garner enough votes to pass the hike.

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