Noda says he will stake career on consumption tax bill

TOKYO — Prime Minister Yoshihiko Noda said Friday he is staking his political career on doubling the consumption tax to 10% as the cabinet approved a revised bill, overcoming an earlier scare after the head of a coalition partner said it may leave the government over the issue.

The agreement is a step closer to a deal the government says will help rein in Japan’s gigantic public debt, but it is still likely to face a rocky road with opposition to the unpopular tax hike both inside and outside the ruling Democratic Party of Japan (DPJ).

Noda is playing a balancing act between keeping his fragile coalition together and seeing through the bill’s passage.

Noda has warned that the future of the world’s third-largest economy rests on tackling its public debt while financing an increasingly expensive social welfare system.

“We must create a society in which people can be assured that tomorrow will be better than today,” he told a press briefing Friday. “I will stake my political career to achieve the goal.

“We must weigh the sustainability of social security. Everybody has fears about their post-retirement years. We must remove these fears and that is the most important point of this reform.

“Now it is time for the whole Diet to make a decision without any postponement, strictly for the benefit of people.”

The bill was Friday sent to the lower house, which will ultimately pass the legislation or shut it down—a process expected to take several months.

A group of DPJ lawmakers is threatening to vote against it, due mainly to worries that a tax increase would derail Japan’s uncertain economic recovery.

The DPJ’s former head and major political power broker Ichiro Ozawa, who leads the party’s anti-tax group, told local media that he “can’t support a simple tax hike.”

“If Mr Noda pushes for a publicly unpopular tax hike, his party support base will disappear,” Ozawa was quoted as saying.

The opposition, which controls Japan’s upper house, is also unhappy with the bill and could scupper its passage.

The law would see the consumption tax rise from 5% to 10% by 2015.

The expected rise in government revenue is earmarked to cover Japan’s snowballing social welfare costs, including public pensions and a universal health insurance system in a country that boasts one of the world’s highest life expectancy rates.

Only about 40% of what the government currently spends comes from taxes.

The rest is financed by borrowing, leaving Japan’s debt at more than double gross domestic product, dwarfing troubled Greece, with analysts warning that only higher tax revenue or spending cuts can bridge the gap.

source: japantoday.com

Obama to offer corporate tax plan

Washington (CNN) -- The Treasury Department will unveil President Barack Obama's corporate tax reform plan on Wednesday, senior administration officials told CNN.

Treasury Secretary Tim Geithner told a Senate panel last week the plan will be an effort to find "common ground" on broad principles between Republicans and Democrats on Capitol Hill.

"We want to maximize the chance we can take advantage of that (common ground) to build consensus on something that's going to work," Geithner told the Senate Finance Committee.

The Obama administration has been talking about unveiling a plan to fix the corporate tax system for well over a year.

Senior administration officials Tuesday would not provide details of the president's plan. They said it will be consistent with his commitment to fairness and the message he laid out in the State of the Union address.

In the State of the Union address and in subsequent speeches, Obama has called for ending tax breaks for companies that outsource jobs overseas and lowering rates for U.S. businesses that create jobs at home.

"Right now, companies get tax breaks for moving jobs and profits overseas," Obama said in his address to Congress in January. "Meanwhile, companies that choose to stay in America get hit with one of the highest tax rates in the world. It makes no sense, and everyone knows it. So let's change it. "

Obama also said that it was time to end subsidies and tax breaks for the oil industry, which "rarely has been more profitable," while increasing tax credits for developing alternative energy sources.

Last year, the pressure for a corporate tax system fix heated up with news of General Electric's zero tax rate in 2010 due to profits overseas and losses at its financial unit. General Electric CEO Jeffrey Immelt is the chief of Obama's Council for Jobs and Competitiveness.

The top corporate tax rate of 35%, among the highest in the world, has long been bemoaned by business leaders and tax experts. They say it discourages foreign investment in the United States and hinders the ability of U.S. companies to compete internationally.

The Obama administration is expected to talk about lowering the top rate while axing some of the more than 130 business corporate tax breaks currently on the books and limiting companies' ability to shift profits to nations where tax rates are lower.

"In short, it will help level the playing field for businesses and allow the government to collect needed revenue while promoting economic growth," Geithner said in his written statement to the Senate panel.

source: http://edition.cnn.com/2012/02/21/politics/obama-corporate-taxes/index.html?hpt=ibu_c2