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Aso prepared to raise sales tax rate to 10% as planned

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(Globalpost/GlobalPost)

Finance Minister Taro Aso on Thursday expressed his willingness to raise Japan's sales tax rate to 10 percent in October 2015 as scheduled, even if the country's economy in the next fiscal year grows at a slower pace than the government expects.

The tax increase "is determined under the integrated social security and tax reform plan. We have to make every effort to live up to the line," Aso said during a parliamentary session.

Aso added the government will make a final judgment after assessing gross domestic product data for the July-September period in 2014, which will be finalized through December that year, calling the data "a major economic indicator" for a decision.

But he emphasized Prime Minister Shinzo Abe's administration will also pay attention to other economic data such as the unemployment rate to decide whether to carry out the second round of the planned consumption tax hike.

The government forecasts that Japan's economy will grow 1.4 percent in fiscal 2014 through March 2015 on the back of robust domestic demand.

Concern, however, lingers that the tax increase to 8 percent from the current 5 percent next month will stifle consumer spending and investment, weighing on the nascent economic recovery and hampering Abe's efforts to beat nearly two decades of deflation.

The sales tax hike is aimed at covering swelling social security costs for Japan's graying population, as the nation's fiscal health is the worst among major developed economies with public debt equivalent to more than 200 percent of GDP.

==Kyodo

http://www.globalpost.com/dispatch/news/kyodo-news-international/140306/aso-prepared-raise-sales-tax-rate-10-planned