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Prime Minister Shinzo Abe will announce Oct. 2 his decision on whether to raise the sales tax in April as planned, after examining the results of the Bank of Japan's Tankan business sentiment survey, a government source said Tuesday.
The government has been carefully studying the possible negative impact of the consumption tax hike on the nation's nascent economic recovery, amid concern it could weigh on business investment and household spending.
Abe said earlier in the day that he wants to look at the BOJ's Tankan survey, due out Oct. 1, as "the last economic indicator" before making up his mind in "early October," according to economic and fiscal policy minister Akira Amari.
The government source later acknowledged that Abe is eyeing Oct. 2. If so, Abe is likely to brief other countries' leaders on his decision when he attends the summit of the Asia-Pacific Economic Cooperation forum from Oct. 7 to 8 in Indonesia.
The central bank releases the Tankan data every three months. The diffusion index covering both manufacturing and nonmanufacturing sectors represents the percentage of companies reporting favorable business conditions minus those reporting unfavorable conditions.
Abe met on Tuesday with Amari and Finance Minister Taro Aso at his office and was briefed on the results of last week's government hearings that heard the views of 60 experts regarding the planned tax hike.
More than 70 percent of the experts, including economists and business leaders, expressed support for the plan, with most urging the government to take steps at the same time to prevent the economy from slowing, such as compiling an extra budget or reducing other taxes, government officials said.
But other experts at the hearings -- including two economic advisers to Abe -- were opposed to the scheduled tax increase, saying the prime minister should consider revising the plan and focus on beating Japan's chronic deflation.
Under legislation enacted last year, the government plans to raise the tax rate from 5 percent at present to 8 percent next April and to 10 percent in October 2015 to secure funds for swelling welfare costs amid the nation's graying population.
Abe had said he would make the final decision this fall after considering various economic indicators, most notably revised growth figures for the April-June quarter to be released on Sept. 9.
Abe also told Aso and Amari that he wants to enhance his economic policy, dubbed "Abenomics," instructing them to prepare for an extraordinary Diet session starting this fall.
The order will likely lead the government to submit bills for stimulating growth through tax reductions and other measures to help boost capital spending.
"I want you to consider every possible measure to strengthen Abenomics," Abe was quoted by Amari as saying.
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