OECD says Japan's consumption tax rate should be more than doubled

OECD, please shut your cake hole.

OECD Secretary General Angel Gurria told a news conference in Tokyo the planned hike is "essential" 

What if her plan just doesn't work? Does she know what she's talking from seeing Japan closely?

including specific spending cuts and tax increases

The OECD and the IMF are like a cracked record.  They view the solution to everything as austerity, reduced public services, wage cuts and tax increases.  I remember during the financial crisis of the late 90's early 2000's the financial bodies running around telling Asian countries to all take drastic action.  Malaysia ignored them and came out better than any other country in the region.

IF and a big IF, Japan had a system in place, similar to many Scandinavian countries, where taxes are truly high, but the people in return get services that, it seems like anyway, everyone seems to be ok with, no one would complain.

Problem here is that the over-spending to prop up the economy, give more money to large corporations, keep the "elderly" happy with subsidizes has thrown things out of wack and the government is unwilling to make the necessary cuts to bring it back to fiscal health.

This report needs to get ample coverage by the Japanese media, with the explanations of why it has come to this, and point the fingers directly at Abe and the LDP. Never going to happen, but one can dream!

Japan and US have big debt, all they can do, print more paper money.

Not a word from the OECD on reducing waste and vote buying thru support of agriculture, fisheries, and construction.

OECD, butt out of Japans business. Japan is doing perfectly fine without you. Record low unemployment and tourism and growing economy. Pick on other nations that arent doing well.

Or cut spending instead?

Are they nuts???

Seriously, if they did this, consumption would nosedive and destroy many businesses in the process!

OECD, Come and live in Japan on an average annual salary and crazy work hours. Why must wealthy people dictate what is best for the people of another country? Unless you can walk in our shoes (the middle/low class families) butt out and worry about your own country.

Japan's fiscal health has remained the worst....

Who writes this stuff? Japan's has one of the world's best fiscal positions. If it didn't, the yen wouldnt be the world's top safe-haven currency, interest rates would be sky high, inflation rampant, and it would be heavily indebted to foreigners.

OECD, please shut your cake hole.

Beat me to it.

Not a word from the OECD on reducing waste and vote buying thru support of agriculture, fisheries, and construction.

exactly! And finally the one who nailed it..

IF and a big IF, Japan had a system in place, similar to many Scandinavian countries, where taxes are truly high, but the people in return get services that, it seems like anyway, everyone seems to be ok with, no one would complain.

> Problem here is that the over-spending to prop up the economy, give more money to large corporations, keep the "elderly" happy with subsidizes has thrown things out of wack and the government is unwilling to make the necessary cuts to bring it back to fiscal health.

> This report needs to get ample coverage by the Japanese media, with the explanations of why it has come to this, and point the fingers directly at Abe and the LDP. Never going to happen, but one can dream!

Exactly! This is it!

Look, raise the consumption tax to even 30% percent if you want. BUT, you have to provide social safety nets and public services that are on par with those that the scandanavian and CANZUK countries provide. AND you have to raise the minimum wage to AT LEAST 1500 yen an hour. AND you have to put forth mechanisms in place that allow people to be more productive at work while slashing work hours. AND you have to address the pork barrel spending and advocate for more fiscal responsibilty.

To just shoot from the hip and tell Japan that it needs to raise its consumption tax without addressing the above issues is just plain STUPID. And it would be economic suicide for Japan.

It seems that any jackass can get a high paying job at the OECD.

This is idiotic. Just raising it to 10 percent is proving to be too difficult, try raising it to 26 and you’d tank the economy and get destroyed at the next election.

I get that Japan needs more tax revenue, but this ain’t the way to do it.

I agree with everyone above. 26% would lead to everyone in Japan rising up in a “rice rebellion”! That is truly insane.

Just because an organization has an acronym, it does not mean they know what they are talking about.

Hoh jesus, don't let Aso hear this. As Yubaru said, if money goes back into healthcare, childcare or other necessary services, I would agree BUT even then, the first thing the government needs to do is cut the expenses. For example, renovation of perfectly good roads each year or stop making new committees that don't serve any purpose etc.

OECD says Japan's consumption tax rate should be more than doubled

If that's so, then raise salaries more than double, too. It takes money to spend money.

Yubaru:

Scandinavian countries, where taxes are truly high, but the people in return get services

The one third of the population are civil servants. Please do not make Japan a socialist country, please.

More than doubled? Bwahahaha! Move over Spain! Here comes Japan!

Abe must be loving this report, when he goes with the 10% he can say "hey, they said we need more tax and should double it but I understand the plight of the common person and will only raise it 2%!"

They are just jealous of Japan’s low consumption tax.

How can one expect high taxation on low wages to fix the economy? Why exactly do these individuals go to school?

Must be nice to be as wealthy as those in the OECD.

AMAZING that record numbers of tourists pay NO sales tax to increase their spending.

Name another G7 country with a consumption tax that high. Also, as much as I love Scandinavian countries, they have tiny populations, have tons of resources, and cannot be compared to major industrialized countries.

Taxes are fine, that's how countries function. The problem for Japan is the rampant spending immediately after. 1% a year might also be small enough that the little fingers won't touch it. Maybe not. Malan

Japan would need a law tying increases to debt

Unless tax is selectively levied on items then the resulting inequity on poorer sections of the population would be too great.

There is vast difference in scale between Consumption tax and European Value Added Tax.

The amount of Consumption Tax can have a profound effect on the economy, especially implementation and collection.

Consumption tax is collected on all transactions made by all companies. Levied also on B2B business transactions, on purchases a business make for supply chain activity, services to sustain business activities. Without considerable reform and restructuring thought the entire system of Taxation.

Even small rises will have traumatic effect across the whole social economic structure of Japanese society. The counties growth model and government policies to combat depopulation.

To suggest a rise to 26%, even in incremental stages is a witlessly counterproductive endeavour.

OECD Secretary General Angel Gurria, attending a news conference in Tokyo came unprepared and fell back on stating preposterous irrational opinion. The Government of Japan needs to consider all characteristics of change to achieve a more balanced and effective system of taxation not just any single element.

Let me keep my money.

Government services suck.

Globalists are cancer.

Wealth comes from communities, not international banksters.

Clearly that body of idiots have no idea what the wages are like in this country and they clearly don’t know that the actual cost of goods and services are more expensive here than other countries.

Yeah, because they certainly can't cut spending instead. Sheesh.

How about different rates for different products/ services like they have in most countries?

0% on say kids/edu/some essential drugs/foods stuff, then a reasonable 7-10% on most goods and services and 20-25% for other items.

Less government, and there will need to be savings across the board.

Politicians will need to be open and transparent in where the cuts will need to be made, and yes how tax reforms will be implemented.

Personally I have no problem in contributing more if it spent on policies that will provide a safety net to families that are most at risk

For example, renovation of perfectly good roads each year or stop making new committees that don't serve any purpose etc.

well, I think you are a bit harsh on them about the committees... they realised the problem and made a committee in charge of assessing how to reduce committees. Just wait for their results.

If the consumption tax is raised the government will just increase spending and the deficit will remain unchanged. Of course, the government always says it will use the extra income to balance the books, but it never does.

There was an article in the paper this morning about Y8 billion wasted on a Hello Work computer system that less than 0.1% of people visiting Hello Work use. The more money they have the more they waste.

The OECD didn’t say Japan needs to increase the consumption tax that high. They are saying that if Japan wants to put a dent in the deficit and create a surplus then the tax would have to be as high as 26%. Because that isn’t feasible, they should focus on ways to keep their inflation target of 2% and find a way to reduce health care expenditures.

The article here is missing a few facts.

Yes cut spending instead.  Consumption tax here is low compared to other OECD countries, hence their view.  Fact is that we have an ever increasing embedded belief that taking high taxes is somehow the norm.  It shouldn't be.

For example, renovation of perfectly good roads each year or stop making new committees that don't serve any purpose etc.

well, I think you are a bit harsh on them about the committees... they realised the problem and made a committee in charge of assessing how to reduce committees. Just wait for their results.

I wonder if people here don't understand how government works. I've been doing work with both the Australian and Canadian governments over the past year, and crazy meetings is a standard across both their governments as well. Japan doesn't seem any worse when it comes to planning.

Don't like this idea either, but its well overdue by a decade at least. Other developed countries have much higher taxes.

Maybe not double but an increase is definitely needed.

wonder if people here don't understand how government works. I've been doing work with both the Australian and Canadian governments over the past year, and crazy meetings is a standard across both their governments as well. Japan doesn't seem any worse when it comes to planning.

true, but 1) how many times are meetings useless because the decision is already taken, but they need to hear the comitee results to be able to officially announce it (whichever way the comittee goes, it doesn't matter).

2) how many times does the person taking the decision actually understands what the comitee says ?

In a few cases, it is actually useful. In lot of cases, it's just a huge waste of time and money. (ask all the people who worked on the brexit deal the last 2 years in UK and at the European parlement, how useful they feel now).

how many times are meetings useless because the decision is already taken, but they need to hear the comitee results to be able to officially announce it

I don't have a specific number to answer this. But if you're trying to imply that government meetings all (or for the most part) are not done unnecessarily in these countries, I'm sorry, but you'd be clearly in the wrong on that.

how many times does the person taking the decision actually understands what the comitee says ?

I don't think this is quantifiable in Japan or any other country.

There is vast difference in scale between Consumption tax and European Value Added Tax.

I thought the implementation was very similar. Although levied on all transactions, companies only pass to the government the difference between tax paid and tax received. The end consumer effectively pays it all.

The famous Bismarck quote is "politics is the art of the possible", and more than doubling the consumption tax strikes me as impossible.

If this OECD statement is a roundabout way for saying Japan has been living beyond its means for far too long, then I agree with it. It is largely the fault of the boomer generation who lived in better economic times but did not save for the future. The demographic time bomb was obvious in the 1970s, so the country should have created a sovereign wealth fund, not a world-leading public debt to GDP ratio.

At the current state of play, the risk of course is that when the plates stop spinning, the yen will crash and all that imported food, energy, and raw materials the country depends on will skyrocket in price. People may not like the idea of 20% shouhizei, but they wouldn't like gasoline at 300 yen a litre, milk at 300 yen a litre, and a small gyudon at 600 yen.

OECD = Obviously Extremely Complicated Dumbasses!

albaleo The functional difference is that the consumption tax in question is imposed by Government on all Japan domestic/import transactions, also on provision of services and defined/ paid at the point of purchase.

On a business in the UK Value-added tax is collected from producers according to the value added along the supply chain. It is commiserate on what the producer charges and pays for i.e raw materials and labour fees or charges for the finished product. For a UK business i find VAT exemptions more flexible I can defer.

I am of the opinion both taxes are regressive.

Who writes this stuff? 

Good question. British business friends tell me that the recommendations for Japan by the OECD and other international agencies are written by Japanese government officials on secondment. Usually they are on secondment to these agencies because they are known to be deadwood.

I wonder if people here don't understand how government works. I've been doing work with both the Australian and Canadian governments over the past year, and crazy meetings is a standard across both their governments as well. 

I worked in Britain for a decade. Do nothing meetings that go on forever are very much the way things are in Britain.

Very stupid Idea, everyone would be enraged if taxes would be more then doubled just like that oO

Then again I can understand that it might be necessary as Taxes in Japan are a Joke ...

When I worked in Japan I earned less then half of what I get in Germany but after Tax I still had more then I have here as we pax ~47% income taxes compared to Japan with a maximum of 21% plus 19% salestax while Japan has 9% as far as I know ... that would be ~66% compared to 30% in Japan XD

The Government needs money but increasing salestax drastically like that would be stupid and Abe would never do it ... they need to slowly raise income taxes

as if any country in our debt-based western civilisation would make it through the next financial Armageddon (-.-)

1 in 6 families can’t afford food for children, old people have to work past 75 years old to survive, and they want to make japan more than double tax? That translates to 1 in 4 children without food and old people working until 85.

Silliness.

Everybody’s going to have to work until 70 anyway so this tax idea is completely misguided. It will drag down consumption and depress the market.

But the Paris-based club of 36 mostly wealthy nations 

OK, we'll consider your proposal carefully.

OK, we considered it. Nothing doing.

Triple my salary and I'll happily pay double the consumption tax.

I really hope Japan is NOT listening.

Lest take a weak ailing economy and beat it to death. The working class needs more wages not more taxes. Has anyone gotten a stimulus check yet ?

socrateosApr. 16  09:02 am JST

The one third of the population are civil servants. Please do not make Japan a socialist country, please.

Japan is already a socialist country. At least for voters and campaign fund donors in over-represented LDP strongholds.

This is an attempt to get us to think, "More than doubled? Well, ten percent doesn't sound too bad. Yeah OK, we'll go with 10%!"

So we are supposed to believe that making prices artificially higher will help boost consumption? Look at my user name.

OECD's says "Japan should more than double the consumption tax rate to as high as 26 percent to ensure its fiscal sustainability, "

How about salary should be in Japan???

Could we ask OECD to open their strong mouth???

Why???

to find crashed stealth fighter jet and its 'secrets' ???

or to buy more fighter jet???

If we stop buying fighter jet, we don't need to work until 75 years when we need little time for us, right???

We request not to compare only consumption tax rate but

1) Salary

2) Working time

3) Work life balance

In Japan, No tuition fee at school ( 1~12th class) but hug budget need for every parents for food, uniform, accessories etc.

We don't mind make our salary double and ask for double consumption tax.

How do you think?

Double it, then exempt the following: food, medicines, essential drinks, books and educational materials, childrens' clothing, utilities, and a few other essential items. Other countries with much high rates such as the UK and Denmark do this.

How about this IDEA: Toyota (and many other large corporations here in Japan) start paying TAXES on their income. Did you know that Toyota pays ZERO taxes. Tax google for any services that they also provide, etc, etc, etc. Problem goes away.

Perhaps taxes do need to go up, but double??!! that would cripple a large amount of the population, I can't se it being beneficial at all, it would more likely see people give up work, or loose the will to work hard which would see a drop in production.

I am also sure that the amount of tourists would drop as it would make there Holliday that much more expensive, would you get all of these Chinese shoppers coming over on planes to stock up on cosmetics? shoving the prices up does not always equate to more profit of taxes, it can have a negative affect to

Bankrupt our country further??

OECD Secretary General Angel Gurria told a news conference in Tokyo the planned hike is "essential" and needs to be followed by gradual increases.

Why is she dictating to Japanese?