The International Monetary Fund on Monday called on Japan to further raise its consumption tax rate in stages to fund growing social security costs, while warning that its public debt may reach up to 2.5 times the size of its economy by 2030 without credible fiscal policy.
The IMF proposal comes after the consumption tax rate was raised from 8 percent to 10 percent on Oct. 1 having twice being delayed. It was the first such tax hike in more than five years.
But in a report issued following annual consultations with the Japanese government, the IMF said the country's consumption tax would need to be lifted to 15 percent by 2030 and to 20 percent by 2050 to finance swelling costs due to an aging and shrinking population.