Amari says postponing tax hike would damage gov't bond credibility

Japan's economic and fiscal policy minister Akira Amari said Thursday that postponing the planned sales tax hikes would be damaging to the credibility of government bonds.

"Authorities must consider that postponing the sales tax (hike) would cause a side effect of impairing the credibility of government bonds," said Amari, countering opposition to raising the sales tax rate in two stages from next year.

Speaking at the Foreign Correspondents' Club of Japan in Tokyo, he added the best way forward would be to "achieve conditions that allow for raising the sales tax, while making thorough preparations so that there will be no negative impact on the economy even after the tax is raised."

The government of Prime Minister Shinzo Abe plans to increase the current 5 percent sales tax rate to 8 percent in April 2014 and to 10 percent in October 2015.

Legislation for the sales tax hikes enacted in August 2012 stipulates as a nonbinding target that the government will seek to achieve nominal economic growth of around 3 percent and real growth of about 2 percent, with prices rising by 1 percent.

Japan's economy grew at an annualized rate of 4.1 percent in the first three months of 2013 in inflation-adjusted terms.