Japan’s government approved on Friday the plan to double the sales tax to 10 percent until October 2015, in order to pay for the increasing welfare costs of an ageing society. An intermediary hike will be made in April 2014, to 8 percent.
The measure has to be agreed by the Parliament before becoming effective. It is yet unclear if the bill will pass, since the opposition, as well as some members of the ruling Democratic Party of Japan, are against it.
Finance minister Jun Azumi and prime minister Yoshihiko Noda are promoting the new measures, saying that a reform is badly needed. PM Noda has said that Japan’s future is depending on the ability of reversing the increasing public debt, which is already on of the biggest among world’s developed economies.
Japan has “no time to spare” on the matter of reducing its debt, Noda said.
Japan’s public budget currently covers only 40 percent of its spending needs from taxes, leaving the rest to borrowing.