A rise in Japan’s sales tax to 8 percent from 5 percent next April will go ahead as planned, Japan’s Prime Minister Shinzo Abe said on Tuesday.
The move, viewed as a a critical step in curbing the country’s soaring debt levels, is expected to be accompanied by an economic stimulus package and possible corporate tax cuts to ensure the economy does not fall into a recession. Abe is scheduled to hold a press conference at 0900 GMT on Tuesday.
Investors cheered the decision, with Japanese stocks extending gains and dollar-yen climbing higher. Markets were already bolstered by a stronger than expected Tankan survey released earlier in the day, which showed business sentiment rising to the highest level in six years.
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