World News

Japan's Suga says future sales tax hike possible but not for a decade

TOKYO (Reuters) - Yoshihide Suga, Japan’s government spokesman and front-runner to become the next prime minister, said on Friday he saw no need to raise the sales tax for a decade, although an increase was possible after that.

FILE PHOTO: Japanese Chief Cabinet Secretary Yoshihide Suga presents his policy ideas to party members at the Liberal Democratic Party's (LDP) leadership election in its headquarters in Tokyo, Japan, September 8, 2020. Du Xiaoyi Pool via REUTERS

Suga, in a television programme on Thursday, had said a future hike may be needed to help pay for the growing costs of an ageing population.

The comments on the politically sensitive topic were considered remarkably candid, particularly for a politician in the running to replace Prime Minister Shinzo Abe, who is stepping down for health reasons.

“My comments about the sales tax were about the future,” Suga told reporters.

“Prime Minister Abe has said an increase will not be needed for 10 years... I agree,” he said. “Without ensuring economic revitalisation, restoring fiscal health will not happen.”

Japan’s sales tax was raised to 10% from 8% last year after multiple delays and fierce debate about the economic and fiscal impacts.

Suga’s comments on a possible future increase appeared to win the backing of Finance Minister Taro Aso.

“There’s no doubt a sales tax hike would be one option as part of efforts to reform spending and revenue,” Aso told reporters on Friday, when asked about Suga’s remarks.

The ruling Liberal Democratic Party (LDP) will hold a leadership election on Sept. 14 to replace Abe.

Suga is widely expected to win the race to become party chief, virtually assuring him of becoming premier because of the LDP’s majority in parliament.

Reporting by Ritsuko Ando and Tetsushi Kajimoto; Editing by Chang-Ran Kim and Lincoln Feast