Japan's parliament passed a Bill today to double VAT over the next three years.
As a result, opposition parties, which claim that the tax rise will stifle growth, increased their pressure on Prime Minister Yoshihiko Noda to call fresh elections to prove he still has the public's support.
Mr Noda, who is sagging in the polls after just 11 months in office, has said he is willing to stake his career on getting the tax rise passed - and even promised opposition legislators he would call elections soon so they would back it.
The rise and a package of related legislation were approved in the upper house of parliament by a fragile coalition of Mr Noda's ruling Democratic Party and two of its main rivals.
Both are now calling for snap elections to be held as soon as next month.
Mr Noda and other supporters say that the tax increase, from 5 to 10 per cent, will boost government revenues as Japan tries to deal with its swollen national debt, which is the largest in the developed world.
They also say the package will shore up Japan's social security system, which faces growing strains as the nation is rapidly ageing.
The PM said supporting the tax rise was a painful political decision, but that it was an unavoidable measure Japan must take to secure its future economic stability.
He said the debt crisis in Europe has shown what happens when a country loses its financial credibility, and said Japan should not allow that to happen.
"We have reached a point where we must urgently secure revenues for our social welfare system," Mr Noda said. "Someone must bear the burden for this growing cost."
But opponents say it will stifle economic growth and put more of a burden on the average household.
It is the first VAT rise in 18 years.
Mr Noda has refused to set a clear date for the lower house elections because his party is now vulnerable to voter dissatisfaction with his handling of the nation's recovery from last year's earthquake and tsunami, his unpopular pro-nuclear policies and the country's weak economy.
If you appreciated this article then please consider donating to the Morning Star's Fighting Fund to ensure we can keep developing your paper.
A government guided by common sense would respond to news that publicly owned Royal Mail has increased profits to £403 million by scrapping plans to flog off the service.
Wales TUC president sets out the achievements of Welsh workers over the past year - and looks to the battles ahead
Interview with Jeremy Scahill, author of a chilling new exposé of the US's worldwide war without end