Japanese Ministers Pledge Budget Supplements To Avoid Sales Tax Impact

Prime Minister Shinzo Abe and his Cabinet members pledged to make efforts to avoid a sharp economic downturn in the wake of the first consumption tax hike in 17 years from Tuesday.

“We cannot overlook an opportunity to break away from deflation,” Abe told reporters at his official residence. “We will take necessary measures in consideration of people’s lives.”

Finance Minister Taro Aso said at a press conference, “I asked other ministers to swiftly implement a supplementary budget for fiscal 2013 and a budget for fiscal 2014” as they include measures aimed at easing the negative impact of the tax increase.

The government will “enter a crucial stage” in the coming few months, when it can prevent consumer spending and investment from stalling following a rush in demand prior to the tax increase, Aso said.

Aso also said he bought a comic book and a bottle of water at a convenience store early Tuesday, adding, “The 8 percent tax rate was applied. I felt relieved that retailers have reacted (to the tax hike) in an appropriate manner.”

Economic and fiscal policy minister Akira Amari said at a separate news conference, “I hope the economy will return to a growth path as soon as possible as we will minimize a decline in demand through smooth implementation of the budgets.”

Chief Cabinet Secretary Yoshihide Suga and Economy, Trade and Industry Minister Toshimitsu Motegi echoed the view, saying they will keep an eye on how fast domestic demand will decrease ahead.

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