politics

IMF urges gradual consumption tax hike in rapidly graying Japan

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would need to be lifted to 15 percent by 2030 and to 20 percent by 2050 

And then spend it instead on useless LDP pork-barrel construction projects to “soften the impact” on the majority of people whose incomes will remain stagnant.

These fatcats at the IMF should know well enough that consumption tax increases need to be implemented in line with wage growth. They just don’t give a rats.

17 ( +17 / -0 )

"But increasing consumption tax will raise prices and reduce spending. Nobody will buy anything. The country will crash."

"Don't worry. We at the IMF will give you loans to bail you out. (smiles sweetly)"

16 ( +17 / -1 )

What the IMF fears most is not Japanese debt, but that the Japanese government will eventually just retake control of the BOJ and press the delete button on the vast majority of its own debt. This would have little to no long-term consequences for the average Japanese person, but it would be a disaster for organisations like the IMF, World Bank and the entire Washington Consensus who's raison d'etre would be immediately called into question.

10 ( +13 / -3 )

The International Monetary Fund has called on Japan to further raise its consumption tax rate in stages to fund growing social security costs, while warning that its public debt may reach up to 2.5 times the size of its economy by 2030 without credible fiscal policy.

The ignorance with the IMF is that they also believe wages are increasing at a rate that is sufficient enough to maintain spending.

11 ( +11 / -0 )

Bertie Wooster: "Don't worry. We at the IMF will give you loans to bail you out. (smiles sweetly)"

and who’s going to pay for that if they can’t pay what they already owe?

2 ( +2 / -0 )

It's like a drunk uncle giving unwanted advice.

16 ( +16 / -0 )

Like taxes aren't already exorbitant here.  And consumption tax is anyway regressive inasmuch as it affects poor people (of which we have way too many) worst.

IMF opinions are not worth the hot air they are carried on.

11 ( +12 / -1 )

Why don't they recommend lower government spending on non-essentials, or population reduction through austerity, instead - their usual tack?

6 ( +6 / -0 )

In addition to raising the consumption tax, the IMF proposed reforms to curb healthcare spending, the introduction of a wealth tax

Tax wealth? e.g. tax me twice?

Please never do that... I'd be looking to take my wealth elsewhere if they start pulling that nonsense on me.

"Without meaningful change to pension, health, and long-term care spending, fiscal sustainability may remain out of reach," the report said.

That's more agreeable. 

Rather than tax wealthy people more, stop spending tax money on them. Let the wealthy spend their own money on themselves, rather than taxing them and then spending money back on them. E.g. let them pay for their own retirement, health, etc. 

Taking people's money, only to give it back to them in other forms, is inefficient and wasteful. Cutting these sorts of wasteful programs and relying on capable people to take care of themselves is surely a good step to get out of Japan's fiscal mess. Redistribution of taxes through pensions and health care etc should be kept to a minimum, e.g. targeting the needy to ensure that they are adequately provided for. Japan can't afford to be wasting its shrinking pool of resources on giving "free" stuff to rich people and paying for it by taxing those same people. If people see the true cost of these things, they will only pay for adequate amounts of it, reducing waste in Japan's systems.

2 ( +4 / -2 )

Why don't they recommend lower government spending on non-essentials, or population reduction through austerity, instead - their usual tack?

It is certainly interesting how the IMF will tell poorer countries to default on pensions and slash welfare spending to handle a debt problem, classic Chicago School stuff, but tells Japan simply to raise taxes without questioning the spending.

I guess the difference is Japan's debt being in its own currency.

5 ( +5 / -0 )

Wealth and higher carbon tax sound like good ideas.

-6 ( +0 / -6 )

Tax wealth? e.g. tax me twice?

;-), I'm pretty sure the IMF's urging is directly targeting the wealth generated by Japan's financial sector which is paid for by salary people paying income tax.

Japan government debt is almost entirely to its own finance houses and paying relatively generous coupons, at a time when interest income to the average punter is 0% or negative. The gravy train can't go on for ever.

2 ( +2 / -0 )

Is IMF as strict with its other 1st world members?

-1 ( +1 / -2 )

Jtsnose Feb. 13 05:55 am JST

Is IMF as strict with its other 1st world members?

Yes. In Spain the consumption tax is 21%. With a population of 46 million people. With an unemployment rate of 14.2%. With a public debt of 97.6% of GDP in 2018. (the latest official data).

Compared to 10% in Japan. And an unemployment rate of 1.64%. And a population of 126.8 million.

I can say that for sure. That the IMF is much more flexible with Japan compared to other first world countries.

0 ( +2 / -2 )

That the IMF is much more flexible with Japan compared to other first world countries.

Japan is most likely a net contributor of funds to the IMF.

4 ( +4 / -0 )

I can say that for sure. That the IMF is much more flexible with Japan compared to other first world countries.

Japan is an economic powerhouse, one of the leading, technologically advanced country in Asia Pacific, & 'bigger" country than Spain, all aspects considered.

Of course Japan can "flex" its muscle much more than what Spain is capable of.

0 ( +1 / -1 )

IMF want to skim Japan, it is a threat to the nation.

As I said before, USA is the puppet master of japan.

let s say NO firmly!

1 ( +2 / -1 )

Japan is most likely a net contributor of funds to the IMF.

...which is paid for by its own debt, maybe that's why they're worried

0 ( +1 / -1 )

Then why is the Yen ridiculously so strong compared to the dollar?

1 ( +1 / -0 )

The average Japanese is in a slippery dark hole and the IMF wants to start filling it in!

0 ( +0 / -0 )

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