Tobacco tax hike shelved
The government and the ruling parties decided Thursday to shelve a plan to raise the tobacco tax, one of the key elements of tax reform for fiscal 2009, according to government sources.
The ruling coalition is to finalize the outline of its tax system reforms for fiscal 2009 on Friday, the sources said.
Following the decision, Prime Minister Taro Aso ordered Liberal Democratic Party Policy Research Council Chairman Kosuke Hori to find an alternative source of revenue to the tobacco tax hike.
The prime minister told Hori that the government's goal of curbing natural increases in social security spending by 220 billion yen each fiscal year is reaching its limits.
"If it's impossible to use increased revenue from the tobacco tax hike [to fund social security costs], we'll need alternatives to cover the shortfall. I'd like you to take full responsibility for finding a solution," Aso reportedly told Hori. Hori reportedly accepted the prime minister's request.
The government had studied a possible tobacco hike as a stable revenue source to enable it to reduce cuts to the projected natural annual increases in social security spending.
But the plan to raise the tobacco tax faced growing opposition from some LDP and New Komeito members that insisted there was no guarantee that the tobacco tax hike would help boost tax revenue.
With the tax hike having been shelved, Aso faces the difficult task of finding an alternative way of boosting social security funding, observers say.
Hori and his New Komeito counterpart Natsuo Yamaguchi agreed earlier in the day to thrash out concrete measures as soon as possible to achieve the government's goal of maintaining the policy of reducing the natural increase in social security expenditures by 220 billion yen annually.
http://www.yomiuri.co.jp/dy/national/20081212TDY01304.htm
1 comment:
i think that their plan to raise tax revenue to boost on security spending is a good idea, especially since they are thinking about a tax increased on tobacco. Many who smokes would not cut down on tobacco that easily because of a little tax raise. Maybe one or two may quit smoking or try to buy less of the tobacco products but in all i think government social security spending will be increased if they go through with this plan.
Post a Comment