Japanese Prime Minister Yoshihiko Noda is likely to propose temporary tax increases to finance earthquake reconstruction, government sources told Kyodo News.
The tax commission's proposals, which could come by the end of this week, would offer a set of options to raise corporate and individual income taxes for as long as 10 years for the rebuilding effort in the wake of the March 11 earthquake and tsunami.
The government is seeking to raise around 13 trillion yen ($168 billion). However, it needs to reach agreement on the tax plan with the Democratic Party of Japan-led ruling coalition.
The report said some DPJ lawmakers are opposed to any tax hikes while others are seeking to delay their effective date because of current economic conditions. They are concerned a tax hike could hurt consumer and business confidence which in turn could adversely impact economic recovery.
The Noda government wants proceeds from the tax hikes to pay off the reconstruction bonds to prevent an increase in outstanding government debt.
"We will not put off the burden (of debt repayment) to future generations," Noda had been quoted as saying earlier to the tax commission. "I want you to present me with a number of choices."