Japanese Sales Tax Second Round Depends on Q3 Economic Data

Prime Minister Shinzo Abe said Wednesday he will decide whether to carry out the second round of Japan’s two-stage sales tax hike as planned in October 2015 after assessing economic conditions in the July to September period of 2014.

“The economy is expected to decelerate during the April-June quarter of 2014” after the first round of a 3-percentage-point sales tax hike to 8 percent next April, Abe said on a TV program.

He added he will make a final judgment on whether to raise the tax rate to 10 percent as planned after assessing economic data for the July to September period which will be released through December next year.

Japan’s two-stage sales tax hike is widely regarded as key to the country’s fiscal rehabilitation, as the nation’s fiscal health is the worst among major developed economies with its public debt level at more than 200 percent of gross domestic product.

Finance Minister Taro Aso has said the government should decide whether to implement the second round of the consumption tax hike by the end of next year to draft a budget for fiscal 2015 starting in April that year.

The government usually compiles an initial budget for the following fiscal year at the end of December.

via Mainichi

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza