Sales tax rate may be doubled in Japan

Sales tax rate may be doubled in JapanIt plans to double the nation's sales tax rate to 10 percent to continue financing the country's social welfare system, Japan's ruling party has said.

The Kyoto News said on Friday that Prime Minister Naoto Kan of the ruling Democratic Party of Japan said the country needs a comprehensive reform in its tax system, urging opposition parties to join related parliament debates.

But some within his own coalition criticized his proposal for doubling the 5 percent consumption tax rate.

The newspaper further said that Shizuka Kamei, of the People's New Party, said raising the sales tax rate before the economy fully recovers would only harm consumers.

Kamei said, ''We must at first improve people's lives. Without people having sufficient purchasing power, a higher consumption tax rate would not lead to higher tax revenues.''

It was also added by the News that Sadakazu Tanigaki of the opposition Liberal Democratic Party said Kan's government should give up its big-budget policies or face the need to raise the tax rate farther above 10 percent.

Tanigaki further said, ''While it's important for major political parties to have a common understanding (on the need for a hike), it would not stop at 10 percent as long as last year's money-scattering DPJ campaign platform remains unchanged.'' (With Inputs from Agencies)