PM Abe Bets It’s Different This Time With Japan Sales Tax Rise

It’s different this time. The four most dangerous words in markets, according to former U.S. Treasury Secretary Larry Summers.

With Japan set to raise its sales tax for the first time since 1997, Prime Minister Shinzo Abe’s political future rides on a different outcome than last time — when the nation slid into a recession and the premier lost his job. To avoid a spending slump, Abe, 59, is poised to unveil a stimulus plan to counter the 3 percentage point bump in the sales levy.

“Abe must know that breaking the economy would mean the end of Abenomics,” said Masayuki Kichikawa, chief Japan economist at Bank of America Corp. in Tokyo, referring to the initiative to reflate the world’s third largest economy after two decades of stagnation. “The miserable failure of the 1997 sales tax rise is stuck in the mind of Japanese politicians.”

Bloomberg

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