Japan Government Panel on Sales Tax Hike Started Today

A government panel began discussing the possible impact of a scheduled sales tax hike on Japan’s economy on Monday, with concern lingering that the measure could thwart Prime Minister Shinzo Abe’s efforts to overcome nearly two decades of deflation.

The government plans to hear opinions from 60 people from a variety of backgrounds, including heads of nonprofit groups, scholars and business leaders, to provide Abe with information to decide whether to proceed with the tax hike to 8 percent from the current 5 percent next April.

The panel is slated to hold meetings seven times at the prime minister’s office through Saturday, with seven to nine of the 60 members scheduled to meet at one time for around two hours.

Seven speakers on the first day include Kaori Yamane, head of the Japan Housewives’ Association, and Hiromasa Yonekura, leader of the Japan Business Federation.

The panel’s discussions will be closely watched by financial markets, as some government officials have recently urged Abe to delay the tax increase, arguing it may drag down business and household spending and in turn choke economic growth.

The panel includes tax hike opponents — in particular, Koichi Hamada, a professor emeritus of economics at Yale University and Abe’s special adviser, as well as University of Shizuoka professor Etsuro Honda, another special adviser to Abe.

Hamada and Honda, who want the tax hike postponed or the margin of increase reviewed, are slated to attend meetings on Tuesday and Saturday, respectively.

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