Japan must raise its sales tax rate next year as scheduled to show it is serious about fixing up its tattered finances, the finance minister said on Tuesday as the government upgraded its view of the economy and said deflation was easing.
The sales tax is due to rise to 8 percent from 5 percent next April, and then increase to 10 percent in October 2015. Prime Minister Shinzo Abe has said he will decide later this year whether to go ahead with the increase, citing concerns it could weaken the economy.
Finance Minister Taro Aso said delaying the increase would go against commitments made to the G20 group of developed and developing nations that Japan would fix its finances, and said the government could take steps to mitigate any economic impact.
“We need to consider an extra budget. It’s better to moderate economic fluctuations (from the tax hike),” Aso told a media conference after a cabinet meeting.
Earlier, the government upgraded its view on the economy for a third straight month, saying deflation was easing and growth was picking up due to massive monetary fiscal stimulus.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.