At the 102nd GRIPS Forum on December 1, 2014, Dr. Takatoshi Ito, Professor of GRIPS; Project Professor at University of Tokyo, gave a lecture titled “Fiscal Problem in Japan: Social Security and Consumption Tax”

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• Abstract

The Japanese fiscal situation is the worst among the advanced countries with the debt to GDP ratio exceeding 240%. However, there is no sign of fiscal crisis as shown by the super low bond rate. On the expenditure side, it is very difficult to stop an increase in social security expenditures—pension, medical, and long term care—due to aging of the population. On the revenue side, it is difficult to conceive a sharp increase in income tax and corporate tax. Consumption tax is the only hope. It is highly likely that a fiscal crisis will happen in the first half of the 2020s, if the government fails to introduce a series of the consumption tax rate hikes.?

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Speakers’ Profile:

Takatoshi Ito, Professor, National Graduate Institute for Policy Studies, and Project Professor at University of Tokyo, has taught both in the United States and Japan since his finishing Ph.D. in economics at Harvard University in 1979. Before assuming the current position, Ito taught at University of Minnesota, Hitotsubashi University, Harvard University, Stanford University, Columbia Business School, and Tun Ismail Ali Chair Professor at University of Malaya. He was also appointed in the official sectors, as Senior Advisor in the Research Department, IMF, as Deputy Vice Minister for International Affairs at Ministry of Finance Japan, as a member of the Prime Minister’s Council on Economic and Fiscal Policy, and as the chairman of “Panel for Sophisticating the Management of Public/Quasi-public Funds.”