The government should postpone the planned sales tax hike next April by a year to safeguard Japan’s nascent economic recovery, a special adviser to Prime Minister Shinzo Abe said Tuesday, adding to uncertainty over whether the hike will be implemented as planned.
Koichi Hamada, a professor emeritus of economics at Yale University and mastermind of the prime minister’s “Abenomics” policies, said the consumption tax increase to secure funds for swelling social security costs could negatively affect Japan’s push to overcome nearly two decades of deflation.
“Raising the sales tax would have various strong impacts, which could hamper (the effects of) Abenomics in boosting the economy and beating deflation,” Hamada told reporters after attending a meeting of a government panel hearing from dozens of experts on the issue. “I’m going to tell the prime minister that there is a risk.”
Under legislation enacted last year, the sales tax rate is set to be increased to 8 percent in April from the current 5 percent and to 10 percent in October 2015. Hamada said he had proposed at the panel meeting that both rises be delayed by a year.
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