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IMF Tells Japan To Triple Its Sales Tax

From Japan’s Kyodo News Service:

IMF calls for raising Japan’s sales tax to 15%

July 15, 2010

WASHINGTON (Kyodo) — The International Monetary Fund on Wednesday recommended Japan gradually lift its sales tax to 15 percent, beginning in fiscal 2011, to restore the nation’s public finances amid ballooning public debts.

"Fiscal adjustment should start in fiscal 2011 beginning with a modest consumption tax hike," the IMF said in a report after annual talks with the Japanese government and the Bank of Japan.

"A gradual increase of the consumption tax to 15 percent beginning in fiscal 2011 and distributed over several years, could generate 4-5 percent of gross domestic product of revenue," it said.

Absolutely. Who can doubt that tripling their sales tax (currently at 5%) will boost Japan’s GDP?

Noting the importance of comprehensive tax reform, the IMF said the sales tax hike could be combined with a reduction of personal income tax allowances and corporate tax reform to stimulate domestic investment.

Sure. Who can doubt that raising income and corporate taxes will “stimulate domestic investment”?

Japanese Prime Minister Naoto Kan’s reference to a hike in the consumption tax rate from the current 5 percent is seen as a major factor behind the setback suffered by his Democratic Party of Japan in Sunday’s House of Councillors election.

But the IMF’s message is likely to give a boost to those who want to push for debate for the sales tax hike.

After all, what is more important – what the voters want or what the IMF wants?

Stressing "the urgency of credible fiscal adjustment," the IMF also called for curbing spending growth in areas other than social security and reforms to entitlement programs

In other words, Japan can cut their defense spending – but nothing else.

Japan’s overall fiscal deficit swelled to 10.25 percent of the nation’s gross domestic product in 2009 and the net public debt ratio rose to 110 percent of GDP, one of the highest among developed economies, according to IMF data.

But their healthcare system is the envy of the world. If you can find a doctor or hospital who will take you as a patient.

The Washington-based macroeconomic watchdog also said it looks forward to "agreement on specific measures" regarding a medium-term fiscal consolidation path that Tokyo announced last month [at the G-8 and G-20 meetings in Canada]…

Japan has the second largest economy in the world. Exactly who elected the IMF to tell them what they should do about their economy?

How long will it be before the IMF starts telling us to jack up our taxes and slash our defense spending? (As, if they aren’t doing so already.)

Who needs a blue-ribbon, bi-partisan ‘Debt Commission’ when we have the IMF?

This article was posted by Steve on Thursday, July 15th, 2010. Comments are currently closed.

5 Responses to “IMF Tells Japan To Triple Its Sales Tax”

  1. proreason says:

    After Obamy completes his transformation of our economy, the IMF will use it as the model for the world.

    If there are enough tents.

  2. NoNeoCommies says:

    Aren’t these the same people that jump on us all the time for telling other countries how to govern?
    Isn’t this “meddling”?

  3. Reality Bytes says:

    Sounds like The “Trilateral Commission” really does exist (without Col. Sanders of course). This one’s for you Pro.


    • proreason says:

      Goldman, Soros, Putin and the Saudis are better candidates.

      But I’m taking it that you think it’s all random, RB.

      You’re probably right. Goldman probably just got lucky several hundred times in a row.

  4. Reality Bytes says:

    No Pro! Funny how Goldman Sachs got billions in Fed bail out bucks while its closest competitor & rival, Bear Stearns was shut down by the same government.

    My Dad had a great line the night before he died. From his death bed, I would tell him what I was doing at work. That night I yelled into his ear:

    “Hey Pop! Guess where I’m going tomorrow!”


    “Guess where I’m gonig To Mor Row!”


    “Goldman Sachs!”


    “Goldman Sachs!!!”

    “Goldman Sach?”


    “I remember those guys…What A Bunch Of Schmucks!”

    I actually thought putting those last words on his tombstone – but it wouldn’t fit.

    God I Miss Him.

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