politics

IMF says Japan must raise consumption tax to show fiscal commitment

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Technically, the IMF is a private, member's only organization. Nobody voted for them and they're totally unaccountable to the citizenry and public at large. Their legal status is the same as your local bowling club.

What right do they have to tell sovereign nations how to manage their internal finances.

4 ( +5 / -1 )

No doubt that the tax hike will help Japan secure the budget for the welfare system where older people can live with the minimum living cost. As far as the government draw "no tax hike" line, Japan should be downgraded by rating agency, which lead to another crisis that is downgrade of Japanese bond. I assume that the interest rate will soar definitely if the bond is downgraded.

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A tax hike could be a double-edged sword to the Japanese economy. On one hand, people might be encouraged to "buy now" before the tax comes into effect. This would cause a temporary upswing in consumer spending, but it won't last long. When the tax comes into force people will tighten their spending habits even more. Many on fixed incomes will drop into poverty.

Japan also needs to focus on the over-valued Yen. Speculative trading has caused it to be valued at a level that is damaging to the economy. While it's good for importers, Japanese companies still rely on exports, and bringing profits back home. Companies will continue to look elsewhere to build factories. Why build in one of the most expensive places in the world when Vietnam, China, Taiwan, and Thailand are finacially much more attractive. Japanese will soon see double-digit unemployment if the industrial hollowing-out continues. If the Yen could be brought to a realistic level of 100 to the $ (or even 120), the exodus of employers would slow or stop and profits brought back to Japan would increase dramatically!

But then this is Japan ..... Shoganai.....

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That's all nice and dandy to increase the tax in the name of fiscal commitment , but the problem is J government present and future are going to waste most of it on through their pet projects again and inefficiency again.( as they have done time and time again ).

3 ( +4 / -1 )

Typical IMF play to further increase inequality. Why do they never call for increased taxes on the wealthy or a tightening of tax loopholes or proper financial regulation of investment banks?

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Insanity at its best, guess I do not have to worry about my pension!

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IMF says Japan must raise consumption tax to show fiscal commitment

Oh, rubbish. You have no power here, begone, before someone drops a house on you!

-Glinda, Good Witch of the North

1 ( +2 / -1 )

The IMF has no say.

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Japan needs to stop listening and bowing down to bankrupt nations who want Japan to follow suit. IMF and the World Bank have no authority here.

Fact 1. Japan has virtually none of its dept owned outside Japan. Fact 2. Japan still has the majority of the world's savings.

Don't raise taxes, just print money!!! Japan can do it because its their own dept. It will devalue the Yen and it will go back to 100.00 or beyond making exports cheaper. When in an economic slump do the opposite of western wisdom. Put money in the hands of the people who can spend it causing economic stimulus. Other nations have their debt owned mostly externally and cannot consider this option. Japan can and should.

Don't worry about being scalded by the Americans, do something for yourselves Japan!

2 ( +4 / -2 )

@ Teesquared

Fact 1. Japan has virtually none of its dept owned outside Japan. Fact 2. Japan still has the majority of the world's savings Don't raise taxes, just print money!!! Japan can do it because its their own dept. It will devalue the Yen and it will go back to 100.00 or beyond making exports cheaper.

Fact 1 You don't have to be Japanese to buy Japanese debt the reason only 10% of Japanese debt is held outside of Japan is like a saying in English "a face so ugly only a mother could love" for example why would I a Non Japanese citizen pay 10,000 yen for a ten year bond with .88% interest and 20% tax (15% income and 5% local) withheld on biannual interest income (US savings accounts give more interest the GOJ bonds). The fact is you are just giving your money to the GOJ and get almost nothing in return why would the international makert want to buy this debt.......... so by saying we are ok its all owned in Japan it was not a plan, Japanese only buy GOJ debt b/c if they don't the GOJ will crash. Fact 2 Japan is an Export driven country they have to have alot of savings in order to control the vaule of the yen which to do so they have to work with the IMF to do it.....Also this is not savings its some of the debt used to control the Yen.... Fact 3 Japan invented Quantitative Easing and it has had no change the past times they have done it, what makes you think printing more money now will fix it? The GOJ needs to learn from its own history the only way to restart Japan now is major economic reform......... IMF is just pointing out what the rest of the world can see 2 years of Japanese economic output are traped in GOJ debt this is money that could be used to invest back into Japan but the GOJ holds on to it and gives almost no interest back to the Japanese that invested in it ,but they have no choice b/c GOJ debt is the only thing that gives interest....... its like having a flat tire and all your doing it pumping more air into it....... stop the leak!!!

-2 ( +0 / -2 )

Can anyone point out to me a country that has either willingly taken IMF advice or had it forced on them and has actually then gone on to prosper?

1 ( +4 / -3 )

I totally agree that IMF advice should be taken with a very large pinch of salt but Japan's ballooning public debt needs urgent attention. We can argue all day about which methods are best, but as we all know, factionalism in the Japanese government and short-term leadership means it will be almost impossible for any concerted reform to take place. We'll have bits and pieces which scratch the surface.

1 ( +1 / -0 )

Go back to the Gold Standard.

It wasn't perfect by any means, but it was better than this free for all.

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Dear IMF: Butt out. Do remember that Japan is your biggest creditor, in other words, your biggest shareholder!

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Dear IMF: Butt out.

Agreed.

And take the New World Order with you!

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NeverSubmit: What right do they have to tell sovereign nations how to manage their internal finances.

Technically, the IMF is a private, member's only organization. Nobody voted for them and they're totally unaccountable to the citizenry and public at large. Their legal status is the same as your local bowling club.

1 ( +1 / -0 )

Insanity at its best, guess I do not have to worry about my pension!

@Yuri, the US is in the same boat.

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Due to Japan consumers being a cash country, the problem has been the chronic underreporting of taxable income in many businesses that leads to revenue loss and inequity with an unequal tax burden among people with the same income. In a theory, the consumption tax avoids the problem of equity, but with the lower income people, the greater their impact can make them politically unacceptable. Increase in property tax is one way to redistribute wealth to narrow the gap between rich and poor and help ensure equal opportunity, and they have relatively little impact on economic activity. In making it easier for wealth disparities, J-goverment has to address the accumulation of wealth at the top end or the loss of wealth at the bottom. The loss of wealth at the bottom end demands decisive steps, since it is giving rise to the kind of poverty problem that Japanese society has largely escaped until now.

0 ( +0 / -0 )

@sfjp330

I like your idea.. But don't you think that may be too much for poor seniors who have nothing but a house, and no physical ability to earn income to pay more?. When I think about a tax hike, I try to think about a distribution of wealth and responsibility at the same time..What is fair is a key issue. There ain't any more free lunch.

0 ( +0 / -0 )

globalwatcherJun. 15, 2012 - 06:32AM JST. But don't you think that may be too much for poor seniors who have nothing but a house, and no physical ability to earn income to pay more?.

Yes, the seniors in Japan will have difficulty if the property tax rate is increased suddenly. My idea is that the existing homeowners can have same tax rate at the present rule. However, the new home and business property (owners) buyers should have new property tax law that will be at a higher rate.

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@sfjp330, understood.

0 ( +0 / -0 )

In other words, the IMF is one of the biggest 'political beggar' with huge appetite for money.. Once the money paid out to them, you have absolutely no say on how they spend it..worse still, they keep 'teaching' you what to do at home..

1 ( +1 / -0 )

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