Japan PM Abe’s focus shifts to Structural Domestic Reforms

Japanese Prime Minister Shinzo Abe’s reflation campaign shifted to structural domestic reforms after he unveiled a stimulus package offering a short-term cushion for the first sales-tax rise since 1997.

Abe’s administration is honing legislation for its “growth strategy” for the year’s final parliamentary session, an initiative companies will scrutinize for fresh reasons to invest in a domestic market burdened by a shrinking and aging population. For now, they get a slew of tax breaks unveiled with yesterday’s 5 trillion yen ($51 billion) program.

Getting businesses to start distributing their rising profits and near-record cash through higher wages and new projects at home will be key to sustaining a rebound in the world’s third-largest economy. Without pay rises, households will be hit by both higher taxes and living costs — as energy bills climb after the yen slid 21 percent the past year.


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