tax hike. japan's prime minister pushes through his signature financial reform package, but now he must pay the political price. welcome to nhk world "newsline." prime minister yoshihiko noda says japan's fiscal situation is dire. it has a mountain of debt and an aging population. he's convinced lawmakers to raise the consumption tax and modify the social security system. members of the upper house have enacted a financial reform package thursday. the main opposition liberal democratic party and its ally

new komeito supported the ruling democratic party in passing the bills. the prime minister had to agree to dissolve the lower house soon and call a general election in exchange. he technically didn't have to do that until next summer. the legislation will raise the consumption tax from 5% to 10% by 2015. lawmakers in the lower house passed the financial reform package in june. noda's dpj negotiated with the opposition on that vote as well. >> translator: japan's society is aging at a rate faster than any in the world. at a speed humankind has never experienced. social security costs are growing by nearly $13 billion a year. someone has to bear the burden to support that. let me promise you that all the taxpayers' money collected by the tax hike will be paid back to the japanese people in the form of social security. all of it will be used for social security.

nhk world's senior political commentator came by the studio earlier to give us some insight on this story. prime minister noda, he gains by raising the consumption tax and reforming the social security system at the same time. is this a win-win situation for the prime minister as well as for japan? >> in short, noda has steered japan away from a financial crisis, at least for now. the country faces a greater proportion of debt on its books than any other developed nation in the world. the net public debt is rising second by second. paying for social security is putting an increasing strain on national finances. plus, the government is paying billions of dollars in the aftermath of last year's earthquake, tsunami, and nuclear accident. noda has emphasized that japan should not end up like greece. >> japan has avoided financial crisis, as you say, but it still has one of the biggest debts

among the g-7 countries. is the tax hike enough to balance japan's budget going forward? >> noda says it's only a step toward dealing with the aging population and growing debt. he admits that raising the consumption tax up to 10% is not a complete solution for restoring fiscal health. as far as the tax rate goes, we are now coming closer to what governments in other developed nations collect. noda has suggested that there's still room to increase the rate beyond 10%. but that's not a popular stance among politicians and voters. many japanese are still against the tax hike. they want noda to do more to slash wasteful government spending. >> how does the passage of this bill affect japanese politics? >> well, the prime minister has staked his political career on this issue.

so now he can say he has fulfilled his pledge to the public, but noda had to give something up for the opposition support. so he has to call a general election soon even though he and his dpj are suffering record low public support. the democrats took power three years ago, after 50 years of almost uninterrupted rule by the ldp. but many japanese voters are tired of these established parties. you know, a couple of the new parties are expected to win relatively high proportion of seats, but it will be still difficult for any party to secure a majority alone. they have to work together and struggle to form a new coalition government. >> masayo nakajima speaking to us earlier. japanese business leaders have generally welcomed the consumption tax increase, but

some say they need to condition reforming social security to reduce the burden on japan's finances. hiromi the chairman of the business federation is among those who praised the legislation but he said they must reform social security in a cost efficient way. tadeshi is chair of the chamber of commerce and industry. the welcomed the passage of the bill but expressed concern on its impact on small and medium-sized firms. okamura urged the government to tackle deflation and help smaller firms deal with the extra price tag on their products and services. the passage of the bill was greeted with mixed reactions among the public. >> translator: i think it's good the bill was passed today. we should not leave this country's debt to our children and grandchildren. >> translator: i don't think it's acceptable to raise taxes

while our lives are becoming more difficult. that's why i'm opposed to the tax hike. >> translator: i want the government to clarify how it will use this money. it should be used to deal with the declining birth rate in asian population. i am opposed to it if the government stays vague. >> here's the reaction of a man from miyagi prefecture who lost his home to the tsunami. >> i don't have a home. i don't have a job. if they raise the consumption tax, i'll be hopeless. there's no way i can make ends meet. >> the consumption tax will be raised from 5% to 8% starting april 2014 and a to 10% from october 2015. we look at how the tax increase affects japanese families. nomura securities did calculations using its own data

and those from the internal affairs household ministry survey budget. they included purchases of big-ticket items like cars. the calculations were for households of two or more people each and assumed that the consumption tax stands at 10%. nomura says that for a household with an annual income of between $25,000 and $32,000, the tax burden would go up by about $1,500 a year. a family earning between $127,000 and $159,000 would be paying $3,300 more. the table shows that low income households would be carrying a disproportionately heavy lear tax burden. the government says the use of revenue from the consumption tax will be limited in principle to covering social security benefits like medical services, nursing care and child rearing support. owners of small factories struggling to survive the intensifying price war are worried about the impact of the tax hike on their business.

nhk world's daisuke azuma has more. >> reporter: these small businesses are the backbone of the japanese economy, and the people running them are concerned about the tax hike. these two plant employees and they produce custom made windows and fire prevention doors for commercial buildings and condominiums. the plant manager has 40 years of experience under his belt. he says price competition in this industry keeps heating up every year. he thinks that cutting prices as much as possible is vital to win orders. so when the consumption tax goes up, mizutani says he can't simply pass the additional cost on to the prices of his products.

>> translator: the current 5% rate is already weighing on financing. so once the rate goes up further, it will be difficult to just increase prices. i guess it's a problem shared by many manufacturers like us. >> reporter: the higher tax also puts future business plans in doubt. the company has been considering replacing some old machines. but it now has no idea how to raise enough money. >> translator: if sales go up, we can't turn a profit and won't be able to pay the loan to buy new equipment. manufacturers may have to give up business and die out. >> reporter: the tax hike is designed to help restore japan's fiscal health.

but the question is how it will affect the small businesses that have long been a driving force for the economy. daisuke azuma, nhk world, tokyo. the tax hike may be causing concern for small businesses and households, but economists say japanese leaders had to make this decision and will face even tougher choices. we got some perspective from naomi fink of jeffreys japan. >> it's a step in the right direction. it's something that has a fairly wide base. it's a fairly efficient tax. it should go some ways to repairing the fiscal surplus. >> but a higher tax rate is a bigger burden for japanese households. fink has concerns about how a drop in personal consumption may dampen economic growth. >> early 2014, prior to the

hike, i anticipate we'll have at or near 2% growth. we have seen instances of front-loaded demand in the past prior to consumption tax imposition and hike, so i expect we'll see the same this time. however in latter 2014, after the implementation of the hike, i do anticipate that growth will slow, possibly to the 1% handle and possibly below. >> a weak economic growth forecast is a warning signal. the legislation contains a nonbinding clause. it says the tax hike will go into effect only if the economy grows. >> now, as a guideline, i would say 2% is probably the -- it's probably the barrier. if we have close to flat growth, i expect implementation will be at least delayed if not indefinitely postponed. >> japan is aiming to turn its

primary budget balance to a surplus by 2020, but some annual ifrts believe raising the rate to 10% just won't be enough. the international monetary fund is urging japan to push it up to 15% at least. fink says other measures need to be taken in addition to raising the consumption tax rate. >> i don't personally think that increasing consumption tax alone is the solution to fixing japan's fiscal balance. i think the increase in consumption tax has to go along with reflation and corporate profitability and increasing the corporate tax base. even increasing the income tax base. south korean president lee myung-bak is stirring up regional tensions by doing

something an official in his position has never been done before. he visited a group of disputed islands in the sea of japan. the japanese government launched an official protest. the south koreans control a set of islets they called docto. the japanese say the territory belongs to them. they call it takeshima. the president flew to the islands accompanied by his environment and culture ministers. a senior official stationed there briefed lee on the situation. he also inspected coast guard facilities and an observatory deck and left after one and a half hours. experts say it will hurt japan/south korea's relations. prime minister noda reacted sharply to lee's visit to the islands. translate takeshima is japan's inherent territory, historically and based on international law. the visit by south korea's

president was unacceptable. the japanese government is adamant on this issue. >> the noda administration has launched a protest against the visit with south korea's ambassador to japan. it has also ordered its ambassador in seoul to temporarily return to tokyo. lee made the trip as south koreans are getting ready for a presidential election scheduled for december. many have criticized him for how he's handled this territorial issue. they also want him to resolve another ongoing dispute with japan. lee has repeatedly asked prime minister yoshihiko noda to make an agreement over the korean women who were forced to work in brothels for japanese soldiers during world war ii. survivors are demanding official compensation and an apology. the japanese government maintains it settled the issue decades ago. next wednesday marks the 67th anniversary of south korea's independence from japanese rule. political analysts say the

occasion has stirred up national sentiment. opposition parties are calling for a stronger stance on japan. lee has been facing criticism over a corruption scandal involving his brother. analysts say the president is trying to gain support and assert his power as his term nears its conclusion. experts from the international atomic energy agency have ended a two-week fact-finding mission to the onagawa mission. the plant was located 70 kilometers from the epicenter of last year's earthquake but unlike fukushima daiichi, it managed to avert a severe accident. nhk world reports. >> reporter: the main purpose of the visit to onagawa was to determine why it was able to withstand the earthquake and tsunami without any major

malfunction. >> the team concluded that the structural elements remain remarkably unaffected given the magnitude and duration of the ground movement. this indicated that there was significant margins in the design. >> reporter: the experts are planning to supply data to iaea member countries so they can conduct their own safety assessments. they also requested the japanese government to allow similar missions to other plants in the near future. recent investigations into fukushima accident have pointed out the government's failure to implement iaea safety recommendations before the nuclear crisis. the question now is to what extent japanese authorities will accept to cooperate with the agency. kaho izumatani, nhk world, tokyo. china's export growth slowed

to just 1% in july. the ongoing eurozone crisis has taken a toll on the world's second largest economy. chinese customs authorities say the country's exports last month came to $177 billion. that's up only 1% from a year ago. this is a sharp decline compared with the double-digit growth in june. it's also the slowest expansion since january when the country's exports showed a negative figure. meanwhile, imports amounted to $152 billion. that's up 4.7% from a year earlier. that brings july's total trade value to just below $330 billion. trade with europe was hit especially hard. from january through july total trade grew just over 7% compared to the same period a year earlier. it's well below the government's target of 10%. toyota motor opened a new plant in brazil. managers predict south america will be a key for kurt expansion. brazil has the fourth largest auto market.

toyota held a ceremony at the plant in sao paulo state. about 900 people attended, including toyota president akiyo toyoda and brazilian officials. they said many factories are being closed in europe. he said this plant will have a positive impact on the country's economy. the automaker spent $600 million to build the facility. it has an area of 3.7 million square meters. toyota plans to manufacturer 70,000 etios compact cars for the first year, mainly for the brazilian market. >> translator: toyota has a long history in brazil that goes back more than 50 years. we hope the etios compact car will become a ground breaker for both toyota and brazil. >> toyota is targeting middle income buyers. this consumer segment is growing rapidly in brazil and other

south american countries due to steady economic expansion. saudi arabian is one of the most conservative arab nations especially when it comes to women's place in society. women have long been banned from working in the service sector. but gradually change is arriving, at least when it comes to selling underwear. nhk world's keenan musa has more. >> reporter: from the shopping mall, saudi arabia is a male-dominated society in every way. >> translator: women should defer to their husbands. >> translator: islam teaches that women belong in the home. >> reporter: jeddah is one of saudi arabia's major commercial cities. in its shopping malls, the salespeople are almost all men.

seven years ago it became legal for women to work in the service industry, but religious groups opposed this move. they said that allowing woman to come into close contact with many men would be disruptive to saudi society. as a result, there still are very few women working in retail stores. however, things are beginning to change. >> reporter: it has benly very recently that women have been able to work in stores selling lingerie. the change came about due to one woman's effort. fatima teaches at a job training center for women. she says there were many times in the past when the way she was treated while buying underwear for herself amounted to sexual harassment. >> translator: it wasn't just by

bust size. sometimes i was asked even more detailed questions. in other countries, women work in underwear departments. >> reporter: fatima started up a facebook page called enough embarrassment. she created it for women to express their opinion on this and other issues. fatima uploaded a video she shot re-creating a situation she experienced once. in the video, a couple visit a store and are shocked when the employee asked the woman's bust size in front of her husband. >> reporter: three months after setting up a facebook page, fatima had more than 10,000 women following her. many posted descriptions on their own experiences. her action made huge waves. she was even asked to speak on the mainstream media.

>> reporter: in january, one year after she launched her facebook page, a decree issued by saudi arabia's king abdullah took effect. from now on, only women will be allowed to work in women's lingerie departments. thanks to fatima's efforts, more women are being hired in saudi arabia to work in shops. the change marks a major step forward for women's rights in this traditional society. >> translator: i used to be a housewife, but now i dream of opening by own shop. >> reporter: the internet played a major role in the movement to bring democracy to the middle

east. now social networks have helped to give women in saudi arabia a way for their voices to be heard. keenan mousa, nhk world, jeddah. a hot, sunny day in tokyo but it looks like some rain in the forecast. robert speta is here with more. >> yes, it has been rather sunny all week but now, unfortunately it does look like throughout the weekend some severe weather could be popping up across much of japan. it's really due to some cold air drifting in from the north here. it's going to be cloudy with warm air allowing the western periphery of the high pressure there off towards the east. and this collision of air masses is going to be resulting in severe weather across much of japan. specifically in western japan, large hail, gusty winds and lightning very well could be possible in some isolated areas out here. not just in japan. over toward the west. across the korean peninsula. could be seeing similar conditions across much of this region as well. now farther towards the west we continue to watch haikui here

lingering over eastern china. this is going to be bringing an additional 25 to 50 millimeters of rainfall. some isolated areas out here could be seeing upwards of 100 to 150 millimeters. now the good news is that going through the weekend, expect this to continue to dissipate. and it will begin to weaken, bringing in fair conditions. across the tropics, we are watching that monsoonal flow. nothing organized out here as far as named systems. that monsoonal flow is bringing destructive weather. across thailand, myanmar, you've seen upwards of 100 millimeters of rain. now the next 48. 100 millimeters will be nalli f here. across ma nil ayou are continuing to recover from the devastating floods this week. over 1 meter of flafl the past week alone. still moisture moving onshore. it's not as intense and not as strong as it's been but still going to be expecting these afternoon and evening rain showers throughout your day here going into your weekend. temperaturewise, tokyo, you are

getting up to 30 here. going to be seeing some rain showers potentially there on your saturday. toward the west, chongqing up to 38. definitely stay out of the sun if at all possible here. now towards the americas, talking about ernesto. it's moving across southern mexico now. starting to work its way in towards the pacific ocean. while it's doing that, it's grabbing moisture here and dumping it along the west coast. so potentially could be seeing some flooding along the western mountains. not to mention it's still grabbing moisture out of the east and bringing it there. it's now a tropical depression. continuing to weaken as it pushes off there toward the west. as far as the north here, though, we have a low pressure area moving through the northern rockies. this could be produce something dry lightning. potentially could cause some wildfires there. in towards the east, a cold front continuing to push off toward the east. this has produced golf ball-sized hail. additional severe weather could be possible with that as it continues to rush toward the east. behind it, high pressure is setting in. bringing much fair weather. cooler temperatures as well. toronto all the way up to 23

here on your friday. 23 as well in chicago. look at phoenix, though. 44 for your high. definitely a streetstro heatstr is going to be very high at risk there. across the west, the iberian peninsula, high pressure has been dominating here. very hot across much of spain. actually in madrid, expecting temperatures into the low 40s. across much of the uk, though, high pressure also dominating here. a little cooler, though. look at the extended forecast for the weekend there. saturday and sunday, sunny skies here for those closing ceremonies. temperatures remain into the low to mid-20s. but after the olympics on monday, expect some rain showers for you to be flying out there. here's a look at your extended forecast.

before we go, we're going to leave you with one of the sights of sumnmer in japan. about 10,000 fireworks lit up the night sky friday in central tokyo. some people say the show is used to pray for the souls of ancestors in japan. i'm gene otani. see you in about 30 minutes.

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