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FinMin Aso: Japan Needs to Raise Sales Tax

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.

via Reuters [1]

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Alfonso Esparza

Alfonso Esparza [6]

Senior Currency Analyst at Market Pulse [7]
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