Economic and Fiscal Policy Minister Akira Amari said that the Japanese government would consider putting off the scheduled sales tax hike from 8 to 10 percent in October 2015. Amari indicated that if the economy declines, then postponing the hike would be best.
The increase in the sales tax is scheduled for a two-point run. The initial increase was approved for this coming April, which makes the previous 5 percent tax into 8 percent. Amari said that, “If the economy stalls, it would be difficult to decide” to push through with the second stage, as “the economic situation would be a major criterion in making the decision,” she added. The government plans to analyze all the economic indicators including the country’s GDP from July to September at the end of this year. Increasing the consumption tax is the government’s solution to the ballooning social security costs for the aging Japanese population. The health system of Japan remains to be inadequate for a developed economy. In fact, public debt related to health has already reached more than 200 percent of the GDP.
Delaying the tax hike will prove detrimental to the rehabilitation of Japan as its restoration plan for the nation hinges strongly on the increase of tax to 10 percent. Prime Minister Shinzo Abe also reiterated the government’s plan, saying, “We will make a judgment (on the next tax increase) while assessing whether the economy will return to a growth path,” adding that his cabinet has yet “to decide whether to raise” the sales tax by 10 percent. To address the slowing of Japanese economy, Parliament authorized an extra 5.5 trillion yen (approx. US$53.8 billion) to the 2013 fiscal year budget that will end in March for a stimulus package aimed to hamper the effects of the sales tax increase.
[via Global Post]