Prime Minister Shinzo Abe pledged Tuesday to craft an extra budget for fiscal 2014 to take necessary measures to prop up Japan’s economy, faltering in the wake of the 3-percentage-point consumption tax hike on April 1.
The country’s economy “has yet to return to a recovery track,” Abe said at a press conference, while announcing his decision to put off the next tax increase to 10 percent from the current 8 percent, planned for October 2015, by 18 months.
Implementing the tax hike as scheduled would likely “threaten the exit from deflation,” Abe said. But he also stressed he will “definitely” carry out the additional tax increase in April 2017 after putting the economy on a stable growth path.
The scale of the supplementary budget for fiscal 2014 through March 2015, designed to fund steps to bolster private spending by tackling higher energy prices and invigorating regional economies, is expected to be about 3 trillion yen, government officials said.
“We cannot let go of a chance to beat 15 years of deflation,” Abe said, underlining the need to help pull the economy out of its prolonged deflation.