The IMF suggested Wednesday following annual talks with Japan's government and the Bank of Japan that beginning in fiscal 2011 there should be "a modest consumption tax hike," Kyodo news service reported.
''A gradual increase of the consumption tax to 15 percent beginning in fiscal 2011 and distributed over several years, could generate 4-5 percent of gross domestic product of revenue," the IMF said.
The international financial organization said the sales tax hike could be paired with reduced personal income tax allowances and corporate tax reform to stimulate domestic investment.
Japanese Prime Minister Naoto Kan's broaching the idea of a sales tax increase from the current 5 percent is considered a key factor in the losses sustained by his Democratic Party of Japan in Sunday's House of Councillors election, Kyodo said.
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