Japan's Finance Minister Jun Azumi has stressed the need to raise the consumption tax rate to restore fiscal health and maintain the creditworthiness of Japanese bonds.

Azumi was speaking to reporters on Sunday on the recent downgrades by Standard & Poor's of credit ratings for 9 eurozone countries, including top-rated France.

He said he does not think the downgrades would have an immediate impact on Japan's real economy. He added that, unlike in the United States, the share of European sovereign debt held by financial institutions in Japan is relatively small.

Azumi warned, however, that Japan could be next to face harsh criticism of its fiscal deficit unless it takes action to reconstruct its finances.
He stressed that a sustainable social security system must be established immediately by securing a stable revenue source.

His remarks are also seen as an effort to urge opposition parties to join in discussions on increasing the consumption tax rate.

The government of Prime Minister Yoshihiko Noda is pushing for a unified reform of social security and taxes, aiming to raise the consumption tax rate from the current 5 percent to 10 percent in October 2015.

Source: http://www3.nhk.or.jp/daily/english/20120115_15.html

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