Japan told G7 finmins it will raise sales tax - Aso

By Leika Kihara and Stanley White

TOKYO (Reuters) - Japanese Finance Minister Taro Aso said on Wednesday he told his G7 counterparts at a finance leaders' meeting last week that his country will proceed with a scheduled sales tax hike next year.

But he sidestepped a question in parliament from an opposition lawmaker on whether that meant Japan has officially plegded to the international community that it will go ahead with the controversial tax hike.

"Raising the sales tax is a very important factor in maintaining trust in Japan's finances," Aso told parliament on Wednesday, adding that he told Group of Seven (G7) finance leaders of the plan during a meeting in Sendai, northeast Japan.

The government had planned to raise the levy to 10 percent from 8 percent in April next year unless there was a financial crisis on the scale of the Lehman Brothers collapse or a major natural disaster.

But Prime Minister Shinzo Abe has signalled the possibility of delaying the tax hike after an initial increase from 5 percent in April 2014 hit consumption and tipped the economy into recession.

Aso, who oversees Japan's fiscal policy, said Japan must convey to the global community its willingness to get its fiscal house in order.

During the G7 finance leaders' meeting, Aso said he had told U.S. Treasury Secretary Jack Lew that Japan will proceed with next year's sales tax hike as scheduled.

There has been conflicting media reports and comments from policymakers on whether Japan will delay the tax hike.

Japan's top government spokesman on Wednesday denied a report by the Yomiuri, an influential daily known to have deep political contacts with Abe and his aides, that the premier has decided to postpone the tax hike.

Japan's economy narrowly averted recession in the first quarter of this year and analysts expect it to post only modest growth, if any, in the current quarter as weak emerging market demand and sluggish wage growth hurt exports and consumption.

Bank of Japan Governor Haruhiko Kuroda said that while Japan's economy continues to recover moderately, consumption has lacked momentum due in part to disappointingly slow wage growth.

"It's true that consumption isn't strong enough," Kuroda told the same parliament session Aso was speaking at, adding that rises in wages and household income were crucial for consumers to boost spending.

(Additional reporting by Kaori Kaneko; Editing by Simon Cameron-Moore)