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IMF urges Japan to double consumption tax to 20% by 2050

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In a statement released after the consultation, the Washington-based institution also called for Japan to extend a set of countermeasures to mitigate the negative impact on consumer spending from the Oct. 1 tax hike from 8 percent.

Raise the consumption tax to 20% but mitigate the effects of a 2% raise now on consumer spending.

What other "calls" is the IMF going to make when it does go to 20%?

With friends like you who needs enemies!

32 ( +36 / -4 )

Do. Not. Listen. To. The. IMF.

They are literally idiots when it comes to fiscal and monetary policies!

The idea that raising the consumption tax to 20% will magically solve the budget deficits is bureaucratic pixie dust.

What WILL happen is that the consumption tax is raised to 20%, consumption WILL decrease. Less consumption, less sales to tax. Less sales will lead to fewer jobs. Fewer jobs will lead to less consumption. All of which will reduce tax income from consumption tax.

The IMF's advice would destroy the Japanese economy.

26 ( +31 / -5 )

This what happens when too many global bureaucrats gain control of things. They tax developed countries.

22 ( +24 / -2 )

Butt out, IMF. All they ever suggest is high taxes. Europe has already been destroyed by high taxation policy like the IMF argues for. Its a disaster and would never happen in Japan.

18 ( +27 / -9 )

Way to totally kill the economy, a 20% consumption tax rate. Who listens to the IMF anyway? Discredited organization, who needs them?

18 ( +19 / -1 )

Yes indeed the monarchy market is surely rising, take from the poor and simply give it to the rich to enjoy. Why not take of the useless top execs who are overpaid along with many board members. I don't see any executives out there on the cashier line, or flagging cars down all day in the hot sun, etc. hmmmm.

18 ( +18 / -0 )

There was a time when I enjoyed eatingvout and helping the local economy but those days are gone!

A 20% tax would ensure that I would remain, forever a hermit...

17 ( +17 / -0 )

The IMF is confusing business reports with everyday people. Raising it to 20% would further sink households into poverty. I don't think the outside world truly understands the wage issue in Japan right now. They just keep reading reports of record profits and savings by Japanese companies.

16 ( +16 / -0 )

I would expect nothing other than this bogus advice from the IMF. How's high consumption tax and non-stop monetary stimulus to hide zero economic growth working out for the EU? Socialist control at its best.

15 ( +21 / -6 )

Just a little shout out and congratulations to all those who predicted this very thing.

15 ( +15 / -0 )

Or, surely a better idea, have the Japanese government stop wasting money on stupid stuff.

14 ( +14 / -0 )

And I thought Christine Lagarde was bad when she was the head of the IMF! Where do they find these people? Sure, in a perfect world, or somewhere like Norway with a nice small healthy population with a ton of oil royalty money, they can have high taxes and still keep people happy. Try that here and the country will be in such deep doo doo it will mark the end of Japan!

13 ( +14 / -1 )

imf = Japanese government who want your tax

12 ( +12 / -0 )

The richer you are, the richer you get.

The same goes for the poor.

imposing tax to everyone fairly isn't fair.

11 ( +11 / -0 )

The IMF...bankrupting and destroying national economies one-by-one since 1945.

10 ( +10 / -0 )

Hey, if it's so easy to fix the economy that way, why not just increase it to 80%? Japan would be debt-free in that case and be the richest country in the world!

9 ( +10 / -1 )

So 20% on top of national tax, local tax and welfare means that the government would be taking more than 50% of income from low income families.

9 ( +9 / -0 )

whaaaaaaaaaaaaaat!!!!!!!!!!!!!!!???????????????!?!?!!

8 ( +9 / -1 )

Butt out, IMF. All they ever suggest is high taxes. Europe has already been destroyed by high taxation policy 

I am against a raise to 20% but saying that high taxes have "destroyed" Europe is beyond silliness. You don't know what you are talking about. The point is that the majority of people can't afford a VAT with a 20% rate here since the prices before tax are already so high. A 20% rate is just unsustainable. The population can't just be punished because of the insane incompetence of the Japanese government. And note that Japan is not foreign to high taxes, as for example inheritance tax can be as high as a massive 55%.

8 ( +9 / -1 )

The increase in salary over the same time will easily cover  this.

The reality has demonstrated that this is utopia. Wage stagnation in Japan has been a reality for people since basically the end of the economical bubble.

8 ( +8 / -0 )

What did I tell you? I said within a few months there'll be talks about jacking up the tax yet again. And while the current government uses the already increased tax income to bolster the military and NOT for what it promised it will be, it'll soon be siding with the IMF and saying it is unavoidable.

8 ( +9 / -1 )

This magic consumption tax. There is one constant. Despite the ingenuous explanations as to why it is necessary, it is never enough.

In 1989 when they introduced a 3% consumption tax it was obvious that it would be going up again. And it did, in 1997 to 5%. Then we had 8% and now 10%.

It should be reversed in gradual steps back to zero.

7 ( +7 / -0 )

With the population dropping like a stone and debt skyrocketing.......the consumption tax will be getting on for 50% let alone 20% come 2050.

Japan’s children face a pretty grim future thanks to the mishandling of the economy for the last 30-odd years.

6 ( +7 / -1 )

if my pay check goes up by 35% as well... why not.

6 ( +9 / -3 )

Tax me on what I earn, what I save, what I spend and it still isn't enough for these rich greasy people? They sit in luxurious offices but lust more of my money. Yet my road is full of pot holes my local library bare of recent releases. Schools need the students to clean them? Give me a reason to loose so much of my money with so little return....even a ride in a $20 billion jet might do it.

6 ( +7 / -1 )

Well, Japan is the Number One in the world, economically speaking, in term of debt.

5 ( +6 / -1 )

re: An increase from 10% to 20% over 30 years is noting! The increase in salary over the same time will easily cover this. If this is the best ADVICE IMF can come up with, then I hope my tax money is not used for this organization.

It definitely is worth "noting" allright. However, when have any salaries gone up to absorb the hits from the working people. Hmmm, try "NEVER", so how is this easily covered? A great example is "gasoline" prices, they keep going up not down? Yet, the media reports all kinds of excuses, yet mega profits by Exxon, Mobile, COSMO, ENOS, ESSO etc. It is BAD ADVICE from pre Cold Era system that no longer is valid and should be disbanded.

5 ( +5 / -0 )

Does the International Monetary Fund really wish to Bankrupt the Japanese Economy? Having a Consumption Tax at 20 Percent at any time will be grounds for going broke. Japan never changed its internal taxes on its citizens. With 20 Percent on Consumption it will amount to a total tax on the people of Japan of 70 to 80 Percent. No one can live in such hardship.

5 ( +5 / -0 )

Similar title: IMF urges Japan to shoot itself in both feet

5 ( +5 / -0 )

Maybe it's just me but I'm surprised the IMF is recommending this. I would have expected the complete opposite, i.e., advice to slash health and welfare spending and screw anyone affected. Here, they are advising that indirect taxation rises to support an expanded state. This is not the advice that was given to Greece or to the Latin American countries during their debt crises.

The IMF report into Japanese pensions a few years ago was a good read. It said the pension age should go up and housewives should pay in. It did not say everyone's taxes should go up to pay for the present system, including free pensions for housewives.

4 ( +5 / -1 )

Plain stupid. An aging population causes exactly zero problems. Having fewer working people paying for health insurance/pension of more and more non-working people is, what causes the problem.

It does not matter if you take their money away by raising social insurance costs or by raising consumption tax.

The trick is, to prevent older people from leaving the workforce. And Japan is doing a magnificent job at this!

3 ( +4 / -1 )

tax breaks on cars and houses.

Thanks for that - although I'm not it need of it at all (I doubt anyone who can afford a house is). Thanks for giving me stuff in exchange for my furusato nozei donations, too.

This voters in this country need to get their priorities straight! You can't have it all! Stop being suckers and voting for this!

3 ( +3 / -0 )

Raise taxes to kill consumption (the capitalist goose that lays the eggs)?! Meanwhile, the capitalists continue to dig... Something has gotta give.

3 ( +3 / -0 )

Yes of course the IMF with no clue suggests more tax as the UN would suggest members pay more to them to prop up their scandals and mismanagement at the top of all of these really badly run organizations.

That's all they have , make the people work harder and pay more, no real idea or solution.

3 ( +3 / -0 )

Instead of raising japan should lower tax to 5% n increase salary 20 % n see boom in japan's birth rate. Japan doesn't n haven't borrowed from IMF that's y they r angry n misleading Japan

3 ( +3 / -0 )

IMF urges Japan to double consumption tax to 20% by 2050

Yes. Good idea. For them!

Bankrupt Japan then they can give us a big fat loan - at interest, of course!

3 ( +3 / -0 )

IMF backed a lot of economic-hitmen, engineered resource-take-over of many countries, the world would be better without it.

3 ( +3 / -0 )

Part of the end game is for the cashless system to be completed.

Want to buy that used game from your friend... bang, 20%.

All transactions will be documented and collected on.

Just wait and see. The only way around it will be grey / black market barter.

Adjusting to 20% wont actually be needed when you can be crushed by 10% for and purchase.

3 ( +3 / -0 )

Or reduce social security costs instead.

2 ( +7 / -5 )

Folks, unless you increase the tax base (working age people) and/or cut government spending including social security, this will happen. Maybe not a sales tax increase, but the dozens of other ways to tax you and your family.

2 ( +3 / -1 )

The only thing "Ballooning" in Japan is politians spending. And debt the same highly paid rack up on future generations.

2 ( +2 / -0 )

The people of Japan are already paying over 50% of their low salaries in taxes. Milk that cow until it’s dry!

2 ( +4 / -2 )

Countries like Japan and the US are stuck in a spiral of debt that has no political solution. Any proposal to align expenditures with taxes will cost the politicians their jobs - they will be voted out in favor of someone who will maintain the fiction that everything is fine. It’s not.

2 ( +2 / -0 )

My prediction is that by 2050 IMF will be disbanded and recreated from scratch. It will be History. A Global uprising which will take place somewhere between 2020 and 2040 will require the development of a new economical model.

Connect all the dots of the recent protests and strikes happening around the world, add to that climate related recession, disproportionate population decrease or increase. It is just matter of time, everything is already set into motion.

2 ( +3 / -1 )

The consumption tax is a regressive tax disproportionately affecting people with lower incomes.

2 ( +3 / -1 )

The IMF can urge all they want - but without a corresponding increase in salaries, the argument is sort of moot.

All the money wasted on the Tokyo Olympics (I make an exception for an excellent Rugby World Cup) could have been spent on the economy instead. Or Fukushima reconstruction

2 ( +2 / -0 )

Or reduce social security costs instead.

I agree with you but I think that is very unlikely. The LDP will never bite the hand that feeds (elects) them.

1 ( +3 / -2 )

People being productive is what makes us richer 

Actually, people consuming does a much better job at making us richer. About 60% of GDP comes from private demand. It's about 70% in the US.

1 ( +2 / -1 )

Actually, people consuming does a much better job at making us richer. About 60% of GDP comes from private demand.

The P in GDP stands for product. Figures of 60-70% of GDP being consumption refers to measures of production using the so-called expenditures approach. It's a mere means of measuring GDP, not a guide as to how to become productive.

But I have a bridge to sell you, if you are willing to pay me for it before I have produced it for you!

1 ( +2 / -1 )

Taro Aso is Japan's representative to the IMF.

We're doomed.

1 ( +1 / -0 )

To the IMF: SHUT UP! Idiots.

1 ( +1 / -0 )

Easy for them to say that when it won’t be coming out of their pockets.

1 ( +1 / -0 )

wow. insane.

1 ( +1 / -0 )

They already do. I see plenty of 'em working at the airports.

I used to pay 21% tax on almost everything in my beloved country, foods, drinks, books, cars, musics, etc...

allowing Seniors to continue to work - perhaps with reduced pay?

0 ( +2 / -2 )

Easily done. Just exempt everything imaginable from the hike, similar to the recent debacle but on a broader scale.

40 trillion worth of spending cuts per year, down from 100 trillion a year, also wouldn't go a miss.

0 ( +1 / -1 )

All of which will reduce tax income from consumption tax.

Actually, a graph would show that consumption tax has increased after each consumption tax hike.

But that's graphs. We are free to believe whatever we like :)

Personally I'd like that graph showing annual government expenditures increasing over time, start to show it decreasing to a level that is a little below the trend in tax revenues.

Also, I'm good with consumption tax; I don't think it should be 0. The government needs to bring in revenues somehow, and consumption tax is a steady reliable source of that. 

Rather, it's income tax is what ought to be 0%. We want people to work and generate as much productive value as they can. People being productive is what makes us richer (and increases our capacity for consumption). 

That's the general case, that would do well for the economy and economic incentives to work, produce and earn. Of course we mustn't forget the needy, who should be provided adequately for out of consumption tax revenues. (People with no income aren't going to be able to buy food, irrespective of any consumption tax rate.)

0 ( +2 / -2 )

IMF only cares about banks. Japan loves its military and high style, mixed in with a pinch of corruption from above. Lets see where the military stands in the next few years, and compare that with how old aged people and places destroyed by nature, like Fukushima and areas hit by typhoons are doing. If the IMF really did care they’d ask governments to cut down on military spending.

0 ( +1 / -1 )

Japan loves its military 

That was last century.

0 ( +0 / -0 )

According to the SIPRI Military Expenditure Database, Japan spent $46.6 billion US in 2018, ranking it in the top 10 countries for military spending.

0 ( +0 / -0 )

Since IMF thinks doubling the tax is better...perhaps tripling it is even better and biglier.

0 ( +0 / -0 )

If the IMF really did care they’d ask governments to cut down on military spending.

Japan's military spending is about 5% of overall expenditure, it's deficit between revenues and expenditure is around 30-40%.

So you could chop 20% out of military spending, and make only a 1% dent in the deficit. Eliminate the military entirely and still the hole would remain significant.

So the scale of the problem dwarfs military spending.

The consumption tax is a regressive tax disproportionately affecting people with lower incomes.

Yes, but is not enabling the government to adequately support people with lower (or indeed, no) incomes, one of the key reasons why we all pay taxes?

And recall that a person with no income, will be able to buy nothing irrespective of any consumption tax rate.

The best way to fund government spending is to have an efficient tax collection system that doesn't trample all over people's desires to be productive through their work. The more productive we collectively are, the better we can fund the government, and indeed if we are more productive and vibrant as an economy, the fewer no-income people there will be to support in the first place.

Consumption tax is only one part of the equation that cannot be viewed in isolation; as part of the overall system of taxation AND government spending to support the needy, it is by no means regressive and disproportionately affecting such people - indeed the opposite is true.

0 ( +1 / -1 )

The IMF...where many of the member states have already been bought by the PRC CCP. Of course, they'd try to screw with the Japanese economy.

0 ( +1 / -1 )

Why not stop there... simply go Communist, and everything you own / earn now belongs to the State for redistribution to those who need it (i.e., the CCP party members),,,,!!!

0 ( +0 / -0 )

The IMF peeked in their crystal ball and saw 30 years ahead.

0 ( +0 / -0 )

Today's news: Japan's retail sales tumbled at their fastest pace in more than 4-1/2 years in October as a sales tax hike prompted consumers to cut spending, raising a red flag over the strength of domestic demand.

0 ( +0 / -0 )

Japan and western economies going bankrupt in our lifetime

0 ( +0 / -0 )

I don't like such 20% consumption tax at all, but it seems Japan would need 20% or more to maintain enough public welfare services by 2050. Depopulation is the biggest problem.

-1 ( +1 / -2 )

The point is that the majority of people can't afford a VAT with a 20% rate here since the prices before tax are already so high.

Exactly. People in Europe deal with high VAT, on certain products - not across the board, because products, noticeably food, are priced much lower than in Japan. Constantly raising consumption taxes, taxes that force people to lower their consumption and unfairly punish themselves and their children, is not a panacea to resolve a nation's monetary problems. Scrutinize and punish those responsible for creating an environment that depends on milking citizens to support irresponsible spending by immature and impotent administrations would go a long way to create a culture that does away with for ever promoting more power to global corporations and the links between corporations and government that do not have the rights of the people who support them in mind.

-1 ( +0 / -1 )

20% seems high . . . Perhaps Japan should consider other means of creating income, and alternatives such as allowing Seniors to continue to work - perhaps with reduced pay?

-3 ( +3 / -6 )

I didn't known JT was full of professional economists more qualified than IMF ones.

-5 ( +1 / -6 )

An increase from 10% to 20% over 30 years is noting! The increase in salary over the same time will easily cover this. If this is the best ADVICE IMF can come up with, then I hope my tax money is not used for this organization.

-10 ( +0 / -10 )

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