Japan's Suga: Will have to call for sales tax hike in future

By Leika Kihara

TOKYO (Reuters) - Japan will need to increase its sales taxes in future as the population declines, the front-runner to become the next prime minister said on Thursday.

Yoshihide Suga, the chief cabinet secretary, also took aim at the country's top three mobile phone carriers, saying they had monopolised the market and there needed to be more competition.

"It's unavoidable for Japan to see its population shrink. If so, we would have to call for raising the sales tax in the future after taking all possible administrative reforms," Suga said on a TV Tokyo business programme.

The ruling Liberal Democratic Party (LDP) will hold a leadership election on Sept. 14 to replace outgoing Prime Minister Shinzo Abe, who is resigning for health reasons.

Suga is widely expected to win the race to become party chief, virtually assuring him of becoming premier because of the LDP's majority in parliament.

He also criticised the country's top three mobile phone carriers, NTT Docomo Inc <9437.T>, KDDI Inc <9433.T> and SoftBank Corp <9434.T>, saying they should return more money to the public and face more competition.

"It's abnormal for Japan's three carriers to reap profits of around 20% using public infrastructure. Utility and gas companies earn less than 10% because they return some of the proceeds to the public," he said.

"I'd like to do whatever it takes to change this. The three carriers are monopolising the market. There's no competition."

(Reporting by Leika Kihara; Writing by David Dolan; Editing by Hugh Lawson)