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Tue, Oct 03, 2006 - Page 10 News List

Abe seeking 2.2% annual economic growth for Japan

AP , TOKYO

Japanese Prime Minister Shinzo Abe said yesterday his government is targeting average economic growth of over 2.2 percent a year for the next 10 years and that a debate over raising the sales tax will have to wait until after elections.

Maintaining the economic growth that was rekindled under predecessor Junichiro Koizumi is a key goal of Abe, who took office just last week.

But the new leader is also facing increasing calls to raise taxes so the government can meet the growing medical and pension costs of the country's rapidly aging society.

Business leaders and economists warn, however, that tax increases could stifle the nascent comeback of the world's second-largest economy after a decade of doldrums.

Japan's sales tax is currently 5 percent, but some from within Abe's own ruling Liberal Democratic Party, including the former finance minister, Sadakazu Tanigaki, want the rate doubled.

Speaking during a question and answer session before parliament yesterday, Abe said his government is eyeing real annual economic growth of more than 2.2 percent over the next 10 years.

Over the past decade of anemic growth, Japan's economy grew an average of 1.2 percent.

"It is indispensable to continue stable economic growth in order to prosper as a beautiful country," Abe said during a question and answer session before parliament. "We will do our utmost to realize stable economic growth by injecting new value and transparency, including innovation in industry."

While acknowledging that boosting tax revenue is a key challenge, Abe indicated yesterday that potentially divisive debate over tax hikes should be pushed to late next year, after parliament's upper house faces critical elections next July for half its seats

"Our country's fiscal condition is extremely severe," Abe said.

"We will discuss a possible sales tax hike as part of a comprehensive reform on the tax system ... and it will be sometime after the autumn, next year," he said.

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