Japan’s cabinet has approved a plan to double sales taxes as part of a government push to rein in soaring public debts.
Under the plan, which requires parliament’s approval, taxes will rise from the current 5 percent rate to 8 percent in April 2014, and then up to 10 percent by October 2015, according to the BBC.
Prime Minister Yoshihiko Noda’s government wants the money to fund growing social welfare spending and help mend Japan’s finances. Japan estimates that 40 percent of its population will be of retirement age by 2060, and has revealed that its social security costs will rise by $12.6 billion a year as its population grows older.
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Finance Minister Jun Azumi told journalists that the government aims to submit the plan to parliament in March, The Wall Street Journal reported.
“We’ll now move on to drafting bills and would like to be able to submit them within the next month,” Azumi said following the cabinet decision.
The legislation is expected to face a number of hurdles in Japan’s parliament, as opposition parties as well as some lawmakers in Noda’s ruling Democratic Party of Japan are against the plan, according to the Agence France Presse.
The opposition bloc controls the upper house of the parliament.
Japan has struggled to rebuild its economy after last March’s earthquake and tsunami. Its outstanding public debt is double the size of its economy – the highest among wealthy nations.
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