Japanese gov't, DPJ agrees on tax reform, social security plan

Japanese government and the ruling Democratic Party of Japan (DPJ) agreed Thursday on social security and tax reform plans that would lead to consumption tax hikes in upcoming years, local media reported.

The agreement came after the government made some concessions to the DPJ related to wording concerning the timing of tax increases. The compromise plan says Japan will double the sales tax rate in stages to 10 percent by the mid-2010s, Kyodo News said.

The news agency quoted economy and fiscal policy minister Kaoru Yosano as saying that the sensitive consumption tax hike to 10 percent from the current 5 percent will be realized between 2014 and 2016.

The doubling of the consumption tax will help secure funds to cover swelling welfare costs amid the country's aging population.

Some DPJ members had been opposed to specifying when to raise the sales tax, apparently taking into account a negative impact on voters.

The situation has also been complicated by Kan's recent announcement of his readiness to resign under certain conditions. Some DPJ lawmakers say the party should discuss the tax hike plan from scratch under a new leader.


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