Japan to Fund Its Gulf Pledge With Tax Increases

Japan’s government said today that it plans to fund its new pledge of $9 billion for multinational forces in the Persian Gulf with temporary increases in petroleum, cigarette and corporate taxes.

Under the plan, short-term government bonds would be issued to collect the money quickly. These would be repaid with the higher taxes, to be levied only in the fiscal year beginning April 1, government spokesman Misoji Sakamoto said.

The $9-billion pledge, which follows a $4-billion contribution last September to the allied forces and front-line states, averages out to about $76 for each Japanese citizen.

“We have decided to ask the people to shoulder this burden in order for Japan to be able to share its appropriate burden,” Sakamoto said. “It will bring pain but it is a necessary cost that Japan, which enjoys peace the most in the world, must bear.”

Under the plan, taxes on various petroleum products would be doubled, generating an expected $3.5 billion. A corporate tax surcharge would yield $4.5 billion.

And taxes on cigarettes would rise 7.5 cents a pack, adding an expected $1 billion.

The corporate levy would amount to 3.2% of the amount of taxes a corporation pays in excess of 2 million yen, or $15,200.

The plan must be approved by Parliament.