Deputy Prime Minister Naoto Kan, appointed last week to also serve as finance minister, indicated Sunday that he may put a consumption tax hike on the table in fiscal 2011.
"I would like to spend this year thoroughly reviewing fiscal conditions," Kan said while making the rounds on Sunday TV talk shows. "Based on the results of the review, I would like to discuss necessary steps, whether that means (raising) the consumption tax or (introducing) a green tax."
Kan said that while Prime Minister Yukio Hatoyama is holding to a policy of not raising the 5 percent consumption tax for the next four years, this doesn't prevent debate on the issue.
The government will need to discuss tax hikes when it becomes clear "there is no way of finding new fiscal resources," he said.
During his fiscal review, Kan intends to look into reserves held in various budget accounts dedicated to special purposes, he said.
"We weren't able to do enough in looking into special account reserves for the fiscal 2010 budget," Kan said, suggesting there is more to come when the government draws up the budget for fiscal 2011 or subsequent budgets.
The government was able to scoop up more than ¥10 trillion in extra funds from special accounts for the fiscal 2010 general account budget, but Kan admitted it will be "very difficult" to find such nontax revenues in the future.