Prime Minister Shinzo Abe will most likely make a decision on whether to raise the sales tax a second time, from the current 8% to 10%, in December, economic and fiscal policy minister Akira Amari said on Sunday.
The April 1 rise from 5% to 8% was the first increase in 17 years and the first step in a two-stage boost that is set to take the levy to 10% in October 2015 as part an effort to curb the nation's massive public debt.
It was Abe's predecessor, Prime Minister Yoshihiko Noda, who forced legislation through the Diet in 2012 to hike the sales tax in two stages.
Amari said that Abe will take into account the economic impact of last Tuesday's tax hike as well as Japan's economic performance during the summer and early autumn before deciding on whether to go ahead with the next hike.
On Saturday, Abe went shopping at Nihombashi Mitsukoshi department store in Tokyo and spent about 40,000 yen. Abe told reporters he wanted to see firsthand how the sales tax hike was affecting consumer spending.
Economists say Abe, 59, has a good chance of surviving the rise in the tax, seen as vital if Japan is to start getting a grip on its public debt and fund the bulging social security costs of the world's fastest-aging population.
That's because the economy is in better shape now after 15 months of his "Abenomics" recipe of hyper-easy monetary policy, fiscal spending and promised reforms.
The Bank of Japan has kept monetary policy unchanged since its intense burst of stimulus a year ago, when it launched an aggressive asset buying program to push consumer inflation to 2% in two years, a tough target for an economy plagued by deflation for the past 15 years.
Japan's economy posted the strongest growth among industrial powers in the first half of 2013, spurred by Abe's reflationary policies, but has slowed to less than a 1% annual rate since then. Policymakers and private-sector analysts expect the economy to dip in the April-June quarter before rebounding in July-September.© Japan Today/Reuters