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Abe stresses he has final say on sales tax hike


Prime Minister Shinzo Abe stressed Monday that it is he who will make the final decision on whether to raise the sales tax from April as planned, after many experts told government hearings last week that the hike should be implemented as scheduled.

"We need to raise (the sales tax) to finance the social security system," Abe said at a meeting of his Liberal Democratic Party, adding, "We cannot improve public finances unless we secure economic growth. My mission is to achieve the two goals."

"I will make a decision eventually after considering various economic indicators," he said.

Abe is expected to make up his mind as early as this month, possibly before he attends the Asia-Pacific Economic Cooperation leaders' meeting from Oct. 7 in Indonesia.

His latest remarks came after the government ended Saturday weeklong hearings with 60 experts such as economists, business leaders and consumer group heads.

Economic and fiscal policy minister Akira Amari said at a press conference later Monday that he will meet with Abe and submit opinions of the experts Tuesday, along with Finance Minister Taro Aso.

A majority of the experts expressed support for the tax hike plan, with most of them urging Abe's administration to compile an extra budget for fiscal 2013 or cut the corporate tax rate, according to government officials.

Other participants, including two economic advisers to the prime minister, were negative about the scheduled tax increase, saying Abe should consider revising the plan in order to safeguard Japan's nascent economic recovery.

There is concern that the tax hike could lead to a deterioration in business and consumer sentiment, making it harder for the government to overcome Japan's chronic deflation.

Under legislation enacted last year, the government plans to increase the sales tax rate to 8 percent in April from the current 5 percent and to 10 percent in October 2015 as part of efforts to finance swelling welfare costs amid the rise in the proportion of elderly people.

The skeptics instead proposed options such as delaying the tax hikes for one year or increasing the rate less sharply by 1 percentage point per year.

A consumption tax increase is widely regarded as key to Japan's fiscal rehabilitation, as the country's fiscal health is the worst among major developed economies with its public debt level at more than 200 percent of gross domestic product.