Japan must raise its sales tax rate next year as scheduled to show it is serious about fixing up its tattered finances, the finance minister said on Tuesday as the government upgraded its view of the economy and said deflation was easing.

The sales tax is due to rise to 8 percent from 5 percent next April, and then increase to 10 percent in October 2015. Prime Minister Shinzo Abe has said he will decide later this year whether to go ahead with the increase, citing concerns it could weaken the economy.

A man holds paper bags with printed logos of NTT DoCoMo Inc, a mobile provider in Japan and a pioneer of the mobile internet, at Tokyo's Ginza shopping district in Tokyo in this July 11, 2013

Finance Minister Taro Aso said delaying the increase would go against commitments made to the G20 group of developed and developing nations that Japan would fix its finances, and said the government could take steps to mitigate any economic impact.

Earlier, the government upgraded its view on the economy for a third straight month, saying deflation was easing and growth was picking up due to massive monetary fiscal stimulus.

Still, plenty of work is needed to repair public finances.

Japan's public debt is the largest among major industrialized nations at more than twice the size of its 500 trillion yen ($5 trillion) economy, and the sales tax hike is considered a test of the government's commitment to reform.

(Source: Reuters)