Yosano, said Japan Quake Efforts must be backed up by Taxes

April 20, 2011, 5: 32 pm EDT by Keiko Ujikane and Takashi Hirokawa

(Updates with comment from Yosano in the fifth paragraph).

April 20 (Bloomberg) - the Japanese economy and fiscal policy Kaoru Yosano Minister said taxes must be part of the funding of the efforts of reconstruction of the earthquake, as polls show support growing for an increase in royalties to help rebuild from March 11 record temblor. "Of course our borrowing must be supported by taxes," Yosano, 72, said in an interview in Tokyo today. " While a sales tax increase "is a possibility, we could explain to the people, the Government made no progress on discussions."Policy makers are faced with the means to pay for the relief after an earthquake and the tsunami which they believe could swell to as much as 25 billion yen ($302 billion), the damage without exacerbating a burden of debt which is nearly 200% of the domestic product gross. Per cent sixty-nine people said that they would be favourable to an increase in royalties to pay for reconstruction efforts, according to a survey by the Nikkei newspaper published this week.Government of Prime Minister Naoto Kan is the compilation of the first of what may be several additional budgets to finance reconstruction after that disaster killed or left more than 27,000 people missing. Secretary General of Government Yukio Edano said yesterday that raise the tax from sale of 5 percent of the country could be an option party are members of the consider.10 YenYosano trillion, a former Finance Minister, said expenditure by the public and private sector to repair the damage would be "well beyond" 10 billion yenwithout developing. The Government said that the first package of spending may be around 4 billion yen.Caused by the earthquake economy ranged from disruption of the supply of strings to the fallout of the nuclear crisis, North of Tokyo, Yosano said. Thousands were forced to evacuate areas surrounding a nuclear power plant in Fukushima, North of Tokyo and concerns about radiation have eroded the incomes of farmers living in surrounding areas.Consumer and corporate sentiment also was damaged, people feel they need to restrict spending, he added. At the same time, the threat of a shortage of electricity damage "mortal" the third world economy, has said the head of the economy and reconstruction will also help boost growth later this year.Exports fell by 2.2 per cent in March from the previous year, the Department of finance said in Tokyo today, a decline of economists say can accelerate. Reports since March 11 have also shown a manufacturing slump and a record decline in the perception of household.The Government must continue to pursue fiscal discipline, including changes to the system of social protection of the nation, he said.The Government will review its objectives in the long term tax "within two to three months", Yosano said, adding that he did not know if reconstruction efforts is taken into account. Kan is committed last June to establish a balance between the nation budget by fiscal 2020.Yosano its support for the policy of the Bank of the Japan, saying that the Central Bank spent "100% of its capacity" to support the nation since the disaster repeated. The Bank of Japan unveiled a loan of one year for banking facility in the affected areas here this month and has also doubled its program for the purchase of goods and injected the record amounts of cash in the market of money since the temblor.

-Editors: Lily Nonomiya, Ken McCallum

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To contact the reporters on this story: Keiko Ujikane in Tokyo at the kujikane@bloomberg.net. Takashi Hirokawa in Tokyo at the thirokawa@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst in ppanckhurst@bloomberg.net; Peter Hirschberg to phirschberg@bloomberg.net

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