How will Japan pay for recovery?

[BagOfCrisps 24]

Is there any news on how Japan will be paying for the recovery needed in Tohoku?

 

It is surely going to cost a ton, and it needs to come from somewhere.

[Curt 1]

Looks like there is a lot of talk of increasing consumption tax.

 

Currently 5% of course. I heard 8% until today when some are mentioning a possible rise to 20%.

[Thundercat 60]

20%??? I hadn't heard that. I believe that would be a sure fire way to cripple the economy.

[joshnii 2]

I saw that on the news tonight.

It was just an opinion I think, not some kind of thing going forward.

[69 5]

20% from 5%?

That would surely not be a good idea.

[snowdude 44]

No it wouldn't as people would really cut back and not spend unless absolutely essential. It would kill the economy not help it.

[NoFakie 45]

Has to be the consumption tax, which is the best solution to the country's debt and ageing problems anyway. Even at 5%, it brings in as much revenue as the income tax does. Income tax revenue is falling now due to falling incomes and the number of people in work also falling with the greying of society.

 

Here's a chart of Japanese government income. Green is income tax. Middle blue bar is consumption tax. The increasingly big blue bar at the top is not income as such. It's borrowing

 

[mitchpee 10]

Honestly, the only way Japan is really going to decrease its debt is through specialized exporting. Japan has the capability to produce some of the better technology in the world. Albeit at a higher price than others, it is still advanced technology.

 

Raising consumption tax may be a good way to reduce some of the incurred debt from the earthquake. However, too much of it could be a shock to aggregate demand and cripple the domestic service/product markets. Then you would have an even higher unemployment rate in a country really striving to find work.

 

It's a tough bind but they need to decrease the yen. The reality is Japan is going to have some economic withdrawals...That is part of the woe of capitalism. Boom and bust. If they can find some sort of global niche like they did with cars it will significantly reduce the time of recession.

[SantaCruz 0]

Good to see the Econ degree coming into play Mitch

[mitchpee 10]

Originally Posted By: SantaCruz

Good to see the Econ degree coming into play Mitch

Haha if only it would make me money instead of pointless forum talk

[Chriselle 158]

I'm certainly not against a raising of consumption tax. When I first came here it was 3% and a few years after raised to 5%. People made quite a stink about the 2% raise...now 15% or more figures are being thrown around...

 

This generation is going to get screwed because of the previous generations lack of insight and greed...If I even meet one old person who complains about a jump in consumption tax I'll explode..

[iiyamadude 6]

Well it's perhaps a natural reaction for someone to be told that their current 5% tax might rise to 20%. Who likes that? They're not all business owners or economists.

[BillTheBinMan 0]

Just seen this.

 

The Japanese government has announced a 4 trillion yen ($48.9bn; £29.6bn) emergency budget for disaster relief, after March's earthquake and tsunami.

 

The budget still needs approval from parliament later this month, and could be implemented in May.

 

Authorities say no new bonds were issued to fund the spending, to prevent adding to Japan's huge public debt.

 

The government estimates it will cost as much as 25tn yen to rebuild the country.

 

The emergency budget is aimed at disaster relief, including providing temporary housing, restoration of infrastructure and disaster-related loans.

[NoFakie 45]

Originally Posted By: Chriselle

This generation is going to get screwed because of the previous generations lack of insight and greed...If I even meet one old person who complains about a jump in consumption tax I'll explode..

With nearly 25% of the population over 65, any solution has include them paying too. They own most of the wealth, so they've got the ability to pay. Poor ones can be helped by safety nets, just as deserving young poor should be. Since most older folks vote and many young don't, don't hold your breath for anything that adversely affects the old. Not from politicians who are themselves mostly old.

[Tubby Beaver 209]

I read something that said they'll use "pension funds" already set aside......that sounds like a grand idea

[RobBright 35]

Ok, kill the older politicians who leech off the economy, increase consumption tax to 10%, cut budges for the quangoes, lower tariffs to improve competition for products and improve the food quantity, starting producing more home made products rather than getting other countries to make them, increase primary industries, such as farming and construction to get people into work which in turn will get them spending.

[fukdane 2]

Rob what is "Folder politician"?

[RobBright 35]

sorry *older.

[fukdane 2]

Aha!