Calls for PM Abe to Delay Sales Tax Increase
A top Japanese government official said Prime Minister Shinzo Abe should delay a planned sales-tax increase, the strongest sign yet that economic weakness is causing concern among those close to the premier ahead of the difficult tax decision.
“I think it should be delayed” by a year and a half to April 2017, the prominent official told a small group of people in a recent conversation on condition of anonymity.
Powerful interests like the Finance Ministry, the Bank of Japan and major corporations want Abe to raise the tax as planned next year to keep Japan’s promise to reduce the biggest debt burden in the industrial world. But the economic and political environment is making it harder for Abe to make unpopular policy choices.
Recovery in the world’s third-biggest economy is struggling, Abe’s popularity has taken a hit with two Cabinet ministers resigning in political scandals, the U.S. Treasury Department is pushing Tokyo not to go too fast on budget-balancing and Abe’s party faces tough regional elections next April.
Abe raised the sales tax to 8 percent from 5 percent in April, the first of a planned two-stage increase that is the boldest attempt in nearly two decades to curb public debt that is well over twice the size of the economy.
The prime minister this month told the Financial Times that while it is necessary to raise the tax for the benefit of future generations, it would be “meaningless” if this inflicted too much damage on the country’s economy. This was largely a repetition of Abe’s position.
Abe’s government last week cut its economic assessment for a second straight month and lowered its assessment of industrial output for the first time in five months as weak consumption following April’s tax hike causes companies to cut production.
Source: CNBC- Calls for PM Abe to Delay Sales Tax Increase
