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Finance Minister Taro Aso suggested Tuesday that the government will not go ahead with the planned sales tax hike from the current 5 percent to 8 percent in April 2014 unless Japan's economy is on a growth path.
Legislation enacted in August 2012 says the government will not raise the consumption tax rate "if the economy is not improving," Aso said at a press conference.
"It's too early to decide" whether to carry out the tax hike, Aso added, emphasizing Prime Minister Shinzo Abe's administration will make a final judgment while carefully assessing several economic data such as gross domestic product and wage growth.
The legislation stipulates as a nonbinding target for the sales tax hike that the government will seek to accomplish nominal economic growth of around 3 percent and real growth of about 2 percent.
Japan's economy expanded at an annualized rate of 4.1 percent in the first three months of 2013 in inflation-adjusted terms, marking the second straight quarter of growth.
Some analysts said the consumption tax hike is necessary to restore Japan's fiscal health, the worst among industrialized nations, but it could hurt consumer spending and in turn the economy, which has recently shown signs of breaking out of deflation.
Abe has said his government will decide on the tax issue this autumn.
The sales tax rate is scheduled to be finally increased to 10 percent in October 2015.
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