Before hiking the 5 percent consumption tax, the government should first cut trillions of yen in public spending and adopt measures to spur economic growth, former economic and fiscal policy minister Heizo Takenaka says.
"Fiscal reconstruction cannot be achieved just by increasing taxes," Takenaka, a professor at Keio University who served in the early 2000s as an adviser to then Liberal Democratic Party Prime Minister Junichiro Koizumi, said in an interview with The Japan Times on Jan. 6.
The 60-year-old economist said cutting government spending and spurring economic growth, for example by introducing greater flexibility and fluidity in the job market and lowering corporate taxes, should be at the top of Prime Minister Yoshihiko Noda's to-do list for restoring Japan's appalling public finances and avoiding a fiscal crisis.