Abe Adviser Says Sales Tax Hike Should be Delayed 1 Year

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.

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