Now or never for consumption tax: Japan LDP member

Japan will move swiftly to hike the consumption tax, an important part of Prime Minister Shinzo Abe's economic agenda, a member of the ruling Liberal Democratic Party (LDP) told CNBC a day after Abe's ruling coalition secured a decisive win in upper house elections.

"We just won another landslide in the upper house. We have a two-thirds majority in the lower house. This is probably the best time to talk about raising the consumption tax," Taro Kono, a LDP member in Japan's lower house of parliament, the House of Representatives, told CNBC Asia's "Squawk Box."

"If we cannot do that now I don't think we could do it ever," he said.

Japan's consumption tax rate is scheduled to rise to 8 percent from 5 percent in April 2014 and to 10 percent in 2015. But recent volatility in the country's stock market and foreign exchange rate has led to concerns that Abe may delay this important step towards improving state finances.

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There is also some concern that a strong election win could make Abe more relaxed about long-term measures to improve Japan's economic outlook and that he may focus on his nationalist agenda instead.

Kono said that raising the consumption tax will be at the top of Abe's agenda.

"We will in September decide to raise the consumption tax starting from next spring for sure," he added.

Abe has talked about "three arrows" to boost Japan's economy. The first two, involving monetary stimulus and fiscal spending, were released earlier this year. The third arrow of structural reform involves deregulation of industries such as energy and health and doubling foreign investment.

The success of Abe's economic policies or "Abenomics" hinges on the successful implementation of this third arrow, analysts say.

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Tax Cuts

Kono said the government was also set to push ahead with tax cuts for corporates, which pay a 36 percent tax rate approximately. That compared with lower corporate tax rates in other parts of Asia such as 17 percent in Singapore.

He added that tax cuts were likely to be broad rather than just targeted at special economic zones, as suggested in June when Abe unveiled his plans for long-term reforms.

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"We will talk about corporate tax soon. I think we need to be talking about across the board tax cuts for corporations. I don't think we will focus on zones, that won't be enough," he said.

The LDP member added that labor market reforms and joining the Trans-Pacific Partnership (TPP), a free trade pact with the U.S. and a number of other nations, were also likely to be high on the economic agenda.

Abe has pushed ahead with negotiations for Japan joining the trade pact, but has faced opposition from within his party and certain industries, which are concerned about opening up their sectors to foreign competition.

"There are still a lot of politicians within the LDP who are skeptical about TPP, but I think we have no other way to go," Kono said.

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By CNBC's Katie Holliday: Follow her on Twitter @hollidaykatie