Japan Aging Population To Drain Budget Even With Sales Tax Hike

Prime Minister Shinzo Abe is poised to raise Japan’s sales tax, but this bruising political decision leaves unresolved the bigger and much more complicated task of curbing runaway social-welfare spending.

The tax hike, Japan’s first serious move in nearly two decades to rein in the worst debt burden in the developed world, looks like the easy part.

Attention has focused on the sales tax increase – still not formally decided – which is hugely politically sensitive in Japan after the last rise, in 1997, was widely blamed for tipping the economy into recession.

But any improvement in government revenue from the tax increase will be dwarfed by expenditures, where a rapidly aging society and generous public services are blowing an ever-bigger hole in the budget.


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Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu