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Japan won't create fiscal plan premised on sales tax hike: spokesman

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(Globalpost/GlobalPost)

The government will not take for granted a politically sensitive plan to raise the sales tax from next April, when it compiles next month a medium-term fiscal plan, its top spokesman said Thursday.

"We'll decide in the fall on (whether to increase) the consumption tax. So we won't make (the fiscal plan) premised on the tax hike," Chief Cabinet Secretary Yoshihide Suga told reporters.

The comment highlights cautiousness in the administration of Prime Minister Shinzo Abe that a decision to raise the tax as planned could nip Japan's economic recovery in the bud. His ruling bloc won Sunday's parliamentary election by pledging to end nearly two decades of deflation in the country.

Some of his advisers say Abe should not be in a hurry to raise the tax rate, which is set to increase to 8 percent from the current 5 percent in April and to 10 percent in October 2015 under the government plan made into law, amid concerns it could slow business and consumer spending.

But Finance Minister Taro Aso, who is also deputy prime minister, said this week the government should raise the tax as planned to improve the nation's fiscal health, the worst among major developed countries, underscoring that Tokyo has internationally promised to prevent further deterioration in public finances.

The upcoming fiscal plan, which will set a framework for the government's expenditures and revenues over the next few years, is widely believed to signal Abe's position regarding the planned tax hike.

Abe is expected to present the plan at the Group of 20 leaders' meeting in September in Russia.

==Kyodo

http://www.globalpost.com/dispatch/news/kyodo-news-international/130725/japan-wont-create-fiscal-plan-premised-sales-tax-hike-