IMF’s Cashin to Lift Consumption Tax Rate in Japan

An official from International Monetary Fund told Nikkei that Japan should boost its consumption tax rate to 15 percent and improve its health care and pension system to renew the fiscal health since the country’s aging population stimulates social security expenditure.

The nation’s public debt was unsustainable and estimated to multiply the gross domestic product (GDP), according to Paul Cashin who leads delegation for IMF's annual inspection to the Japanese economy.

According to an interview, Cashin requested for an additional increase in consumption tax rate by 0.5 to 1 point. He further mentioned that importance of tax in restoring public finances and warned that lifting the rates alone might not reach the expected gains in social security expenses.

In 2014, Japan had increased its consumption tax 8 percent and Abe administration plans to raise the rate by 10 percent again in 2019 after the delay in the increasing the initial target in 2017 amid issues on economic impact. While the IMF also did not approve the plans regarding lower rates in terms of foods and other product and urges for a uniform tax.