The International Monetary Fund said Japan should triple its consumption tax in order to cut the country’s massive public debt.
At 5 percent, Japan’s consumption tax rate is one of the lowest in the world.
Anoop Singh, IMF chief for Asia, said “It has been our sense… that raising the consumption tax gradually, not immediately, beyond 2015 to say 15 percent, could be more in line with the tax rate in other countries.”
According to a 2010 CIA estimate, Japan’s public debt is 197.5 percent of the GDP–second only to fiscally irresponsible Zimbabwe. According to an IMF estimate, Japan’s public debt is 220 percent of GDP–by far the highest in the world.
Singh said: “In some way (increasing) the consumption tax is the most appealing measure to take. It is more growth-friendly and less distortive than other options.
“That, along with other reforms in social security and other spending, as a package, would then bring the debt ratio down.”
Since the collapse of the bubble economy in 1990, Tokyo has barely kept the economy afloat through massive pork-barrel spending–namely white elephant public works projects consisting of pouring concrete all over the country.
Prime Minister Yoshihiko Noda, a fiscal conservative, has already proposed doubling the tax to 10 percent, but has predictably encountered formidable public and political opposition.
Naoyuki Shinohara, IMF deputy managing director, praised Noda’s decision to raise the consumption tax, but said 10 percent won’t be enough.
“While the IMF welcomes the proposal, there will come a need for an even further increase in the future,” Shinohara said in an interview with the Asahi Shimbun.
One thing should be clear: paving over the entire country in the name of creating jobs is no longer a viable economic strategy.
A few months ago, I wrote about the early stages of the conflict in Ukraine through the lens of Sun Tzu’s The Art of War. While it appears likely that the war will carry on into the foreseeable future, enough time has passed for us to make an honest assessment of each side’s relative […]
The Ukrainian Army has made dramatic strides in the last few weeks. Ukraine’s tactical commanders have outfoxed their Russian counterparts, and by issuing a feint towards the south the UA has been able to earn substantial gains in the north of their country. The impact of these efforts have been compounded by the steady stream […]
In mid-May the Irish political party, Sinn Féin, won the plurality of seats in the Northern Ireland Assembly. Many American readers might not fully understand the significance of Sinn Féin’s political victory- but rest assured that subjects of the United Kingdom and a wide range of political movements the world over have heard the message […]
The first wave of the Russian offensive in Ukraine has fallen short of Russian autocrat Vladmir Putin’s ambitions. Most analysts deduced that Putin had hoped to achieve a decapitation strike of the Ukrainian government- taking Kiev and replacing Ukrainian President Vladimir Zolinski with a pro-Kremlin voice. Kiev has been threatened repeatedly through the course of […]
On the weekend of March 26th, the notorious MS-13 gang went on a massive killing spree in El Salvador which left more than 70 people dead by Sunday. Even for a country where powerful gangs hold massive sway, this recent tragedy stands out considering that it was the bloodiest day on record since the civil […]
