UPDATE 1-Japan panel:Past sales tax hike didn’t hurt economy

(For more stories on the Japanese economy, click [ID:nECONJP])

* Tax panel recognises urgency for fiscal reform

* May pave way for eventual sales tax increase
(Adds details)

TOKYO, May 18 (BestGrowthStock) – Many members of a Japanese Ministry
of Finance panel take the view that a sales tax hike in 1997
caused little damage to the economy, a senior official said,
backing the finance minister’s argument that a higher tax would
not necessarily hamper growth.

Finance Minister Naoto Kan has asked the financial affairs
panel to review whether the sales tax increase in 1997 hurt the
economy, in a move seen as possibly paving the way for an
eventual rise in the tax, which now stands at 5 percent.

Kan has argued that a tax hike would help, not hamper,
economic growth if the money raised is spent wisely.

“Many members agreed that the tax hike was not the main cause
of Japan’s recession (that started in the second quarter of
1997), but Japan’s financial crisis and Asia’s currency crisis
were to blame,” Parliamentary Secretary of Finance Hiroshi
Ogushi, said in a news conference.

Ogushi said now that Greece’s debt woes have turned the
spotlight on Japan’s debt burden, which is nearly twice the size
of its economy, panel members recognised there is a growing
urgency for fiscal reform.

“The members basically agreed that tackling fiscal reform by
raising more revenue is not all negative for the economy,” he
said.
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(Reporting by Sumio Ito and Rie Ishiguro; Editing by Chris
Gallagher)

UPDATE 1-Japan panel:Past sales tax hike didn’t hurt economy