Japan seeks tax increase to raise $131 billion for reconstruction efforts

Japan seeks tax increase to raise $131 billion for reconstruction efforts

2011-07-26 23:47:33 GMT+7 (ICT)

TOKYO, JAPAN (BNO NEWS) -- The government of Japan on Tuesday announced that it is considering raising the country's taxes by 10.3 trillion yen ($131 billion) in order to help collect the necessary reconstruction funds following March's catastrophic earthquake, Kyodo News reported.

The tax increase would be carried out during a five-year plan, as the Japanese government also looks to raise some 200 billion yen ($2.56 billion) with the sale of its shareholdings in subway operator Tokyo Metro Co. and other state-owned assets.In addition, government officials will be cutting down on policy spending in order to create an additional fund of 2.4 trillion yen ($30.7 billion) over four years from fiscal 2012.

Japan has been trying to incorporate all of its proposed strategies for reconstruction efforts and set up a basic guideline by the end of the month, as it has set 10-year reconstruction period, which will require around 80 percent of the country's expenditures during the first five years of this period - 19 trillion yen of the 23 trillion yen ($243.4 billion to $294.6 billion). However, a nationwide tax increase is likely to be highly criticized.

Japan has been facing an ongoing nuclear crisis since the Fukushima Daiichi nuclear power plant was severely damaged on March 11 when a 9.0-magnitude earthquake and a subsequent tsunami devastated the country. The disaster disabled the cooling systems of the plant, and radioactive elements leaked into the sea and were later found in water, air and food products in some parts of Japan. Subsequent power shortages throughout the country have further complicated recovery efforts.

At least 23,482 people were killed, while 8,069 people remain missing. There are still more than 88,000 people who are staying in shelters in 21 prefectures around Japan.

According to the Japan Research Institute, the country's reconstruction efforts will cost between 14 trillion yen ($174.58 billion) and 18 trillion yen ($224.46 billion) in the upcoming 10 years, including 9.1 trillion yen ($113.47 billion) this year alone. Japan has already allocated a 4 trillion yen ($48.89 billion) emergency budget to finance the early phase of reconstruction efforts following the disaster.

On June 23, the government also announced a budget of 2 trillion yen ($24.8 billion) to be distributed to cover the massive compensation claims since the beginning of the disaster being faced by Tepco, which operates the Fukushima Daiichi nuclear power plant

-- © BNO News All rights reserved 2011-07-26