Poll Says Japanese Firms Want Tax Hike Delay

Japanese companies overwhelmingly want Prime Minister Shinzo Abe to delay or scrap a planned tax increase, a Reuters poll shows, highlighting concerns that it could derail a fragile economic recovery.

As expectations grow that Abe will soon announce he is putting off the unpopular measure, the Reuters Corporate Survey found that nearly three in four big companies think the economy is too weak to weather the increase as scheduled in October 2015.

The government raised the national sales tax to 8 percent from 5 percent in April, the first of a two-stage plan that would raise it to 10 percent next October in a bid to rein in massive public debt.

 
The April hike pushed Japan into its worst decline since the global financial crisis in the second quarter. Abe has said he will look at third quarter GDP, due out Monday, before deciding whether to proceed with the planned October 2015 tax increase.

Some Japanese media say Abe will postpone the hike and call a general election in an effort to lock in his grip on power. The economy likely grew at an annualized 2.1 percent rate in the third quarter, a relatively feeble rebound the from the 7.1 percent April-June plunge, a Reuters poll of economists showed last week.

via Reuters

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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