Japanese Government Split on Next Tax Hike Timing

A government panel started work Tuesday listening to the views of experts on a further consumption tax hike, with five of the eight members who joined the first meeting saying the tax rate should be raised to 10 percent as planned next year while the other three called for postponing the increase.

The five, including Akio Mimura, chairman of the Japan Chamber of Commerce and Industry, asked Prime Minister Shinzo Abe to go ahead with the next tax hike to help restore the nation’s fiscal health — the worst among major industrialized economies.

But three expressed concern that the planned tax hike is likely to choke private spending and investment, making it more difficult for the Abe administration to achieve its prized goal of beating nearly two decades of deflation.

The panel — which is drawn from people from a variety of backgrounds such as academia, business and nonprofit organizations — is scheduled to hear the opinions of around 40 experts in a series of meetings through Nov. 18 before reporting the results of the discussions to Abe.

The experts are expected to exchange views on whether the tax hike will hamper success of the “Abenomics” policy mix and what kind of steps the government should take to prevent the tax increase from hurting the economy if it is implemented.

Abe will make a final judgment on the tax hike — scheduled to take place next October — by the end of this year, while “comprehensively” taking expert opinions and economic data into consideration, Chief Cabinet Secretary Yoshihide Suga said at a news conference earlier in the day.

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