by Wadsam | February 19, 2012 9:39 am
The Japanese cabinet has passed a plan to double sales taxes in an attempt to control the soaring costs of public debts.
The plan, which needs parliament’s approval, will see taxes raised from the current 5% to 8% in April 2014, and then up to 10% by October 2015.
Japan has revealed its social security costs will rise by 1tn yen ($12.6bn; £8bn) a year as its population ages.
It estimates 40% of the population will be of retirement age by 2060.
However, the plan is unpopular with both the opposition parties and politicians within the ruling Democratic Party of Japan.
The country has struggled to rebuild its economy after the financial impact of the earthquake and tsunami last March.
The Japanese Cabinet office estimated that the disaster could cost the country between $198bn and $309bn.
Japan’s current debts run at 228% of GDP, at $10.5tn.
Prime Minister Yoshihiko Noda, in an online message after the cabinet’s vote, said Japan had “no time to spare” in reducing its debts.
He said: “If you pile up one trillion yen in 10,000-yen bills, it reaches the height of 10,000 metres, which is taller than Mount Everest.”
He added: “Some of you may think you are an unlucky generation which needs to support many elderly people – but those who built the current affluent society are the senior generation – your parents’ generation.”
The new legislation will be put before the parliament for approval in March.
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