Consumption Tax in Japan

The government and the ruling Democratic Party of Japan decided Friday on a draft plan to raise the country’s politically sensitive consumption tax, starting in 2014, before presenting it to opposition parties, many of which have refused to join any talks on the plan.

Prime Minister Yoshihiko Noda, who has pledged to restore Japan’s fiscal health, the worst among major developed countries, aims to obtain approval from the opposition camp and submit relevant bills to the Diet by the end of March. The premier has also said he could let people judge the plan before implementing the tax hike by holding a general election.

Last month the government and the DPJ separately approved the draft plan, which said the current 5 percent sales tax rate will rise to 8 percent in April 2014 and to 10 percent in October 2015. On Friday, they agreed on it at a meeting of the joint panel discussing the issue.

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