Prime Minister Shinzo Abe's government has picked 59 people from a variety of backgrounds, such as heads of nonprofit groups, scholars and business leaders, as members of a new panel to assess the possible impact of a planned sales tax hike on Japan's economy, the Cabinet Office said Tuesday.
With fears growing that the consumption tax hike could rob the economy of an opportunity to beat nearly two decades of deflation, Abe will consult with the panel before deciding this fall whether to raise the tax rate from the current 5 percent to 8 percent next April as legislated last year.
Among the members of the panel are Kaori Yamane, head of the Japan Housewives' Association, former Bank of Japan Deputy Governor Kazumasa Iwata, who heads the Japan Center for Economic Research, Hiromasa Yonekura, leader of the Japan Business Federation, Yokohama Mayor Fumiko Hayashi, and economists from private think tanks.
The panel, scheduled to be kicked off next Monday, will also hear from people who oppose the planned tax hike, including Koichi Hamada, who is a professor emeritus of economics at Yale University and Abe's special adviser, and Etsuro Honda, a University of Shizuoka professor and another special adviser to Abe.
From the government side, economic and fiscal policy minister Akira Amari, Finance Minister Taro Aso, BOJ Governor Haruhiko Kuroda and private members of another government panel on economic and fiscal policies will participate in the new panel.
Discussion by the panel could be closely watched by financial market participants, as some government officials have recently urged Abe to postpone the tax hike, arguing it may weigh on business and household spending and in turn choke economic growth.
Abe has said he will make a final judgment on the tax hike after hearing opinions from the members of the panel, and looking at the country's economic growth in the April to June period among other factors. Revised figures for the second-quarter gross domestic product are due out on Sept. 9.
Japan's economy grew by an annualized real 2.6 percent in the three months on the back of a recovery in consumption and exports, the Cabinet Office said in a preliminary report released last week.
Under the legislation enacted last August, Tokyo plans to raise the rate to 10 percent in October 2015, aiming to cover swelling social security costs at a time when Japan's population is aging.