Japan’s Economic Minister Says Abe Neutral on Upcoming Tax Hike

Japanese Prime Minister Shinzo Abe remains “completely neutral” on whether to raise the national sales tax, Economy Minister Akira Amari said on Sunday even as he expressed concern about the strength of the country’s economic recovery.

Abe faces a tough decision by year’s end on whether to raise the tax for a second time – doubling the tax rate over 18 months – in a bid to curb Japan’s runaway government debt.

The risks to his “Abenomics” strategy to reflate the long-moribund economy are increasing, whether Abe decides to go ahead with the tax or not. Raising the tax as the recovery falters could send the economy into a tailspin, while delaying the move could shake investors’ confidence in Japan’s ability to repair its tattered finances.

“I think he is completely neutral” on the decision, Amari told a talk show on public broadcaster NHK.

“The prime minister is carefully searching to find the most effective combination to achieve economic recovery, stability for the social-security system and fiscal reform.”

Abe raised the tax to 8 percent in April from 5 percent. He says he will decide in December whether to proceed with a plan to raise it to 10 percent in October 2015. Economists generally expect he will raise the tax.

via Reuters

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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