TOKYO, Dec 29 (Reuters) - Japan’s ruling party tax panel proposed on Thursday a new timetable for increases in sales tax in the face of growing opposition, with the first increase not coming until April 2014, six months later than originally planned.
Japan, which will rely on public debt to fund nearly half of next fiscal year’s budget as tax revenues dwindle, wants to double the sales tax to 10 percent by mid-decade to fund social welfare programmes.
But Prime Minister Yoshihiko Noda has run into strife getting support, not just from the public and the opposition but also from some members of his Democratic Party. On Wednesday, nine junior members of the party handed in requests to leave the party over the issue.
Late on Thursday, Democratic lawmakers were still debating the proposal -- which calls for raising the 5 percent sales tax to 8 percent in April 2014 and then to 10 percent in October 2015, but it was not clear if they would be able to reach a consensus by the prime minister’s self-imposed deadline of the year’s end.
Noda earlier in the day appealed to party members to come up with a plan that included specific times for the sales tax to be increased and urging them to be mindful of Europe’s debt woes.
“From the perspective of risk management, reform of social welfare and taxes is something that must be done,” he said.
A meeting on Wednesday lasted more than eight hours but ended in stalemate as Democrat legislators failed to agree on the earlier plan to raise the sales tax to 8 percent in October 2013 and then to 10 percent in April 2015.
Japan’s sales tax is among the lowest in developed countries but many politicians consider tax increases to be politically taboo, given the drubbings ruling parties have got in past elections when even just the possibility of raising taxes has been a main issue.