Abe may rethink sales tax hike

Contrary to what most thick heads believe, the economy cannot be modeled on a single variable. Japan is still deflationary as the recent core-core cpi figures indicate and to raise the consumption tax immediately would be detrimental, as has been in the past. However there is the matter of the Government debt. Standards and Poors has suggested a possibility of downgrading the JGB's if they don't raise the consumption tax to clearly show that the Government is endeavouring to offset the debt (effectiveness of this is a seperate discussion). A SP downgrade would cause interest rates to rise, a disaster. Timing based on actual economic indicators plus international dialogue is of the utmost importance.

Rising the consumption tax will badly hurt the Japanese economic recovery...even a child is able to understand this simple concept!!! Just now is the last thing Japan needs...

What this shows is how dramatically Japan's corporate tax contributions have shrunk in the past several decades, and direct and indirect personal taxes have risen to fill the gap. Corporations are paying a lot less than they used to. We also know that economic inequality is harmful to society. There is clearly no political will to deal with this crisis. Japanese citizens seem to have an extraordinary capacity to put up with so many things that don't work. But for how long?

They can increase sales tax to 15% for all I care, as long as they reduce income taxes by the same %

I will gladly take high consumption taxes over high income taxes

Then maybe people wouldn't waste their money on just consuming, and instead save / invest / spend it on educating themselves etc

We as humans already consume way too much. We don't need to always buy the latest gadgets, toys, fashions, etc

Would probably make people value the things they already posses much higher, and take care of them better.

The solution is simple, abolish the sales tax.

In terms of taxation I believe Hashimoto got it right in his plan to reorganize the present prefecture and dismantle the present central collection system and create a state based collection system much like the US where each state can decide where to emphasize their tax structure. This way regions like Tohoku can grant tax breaks to large corporations so they can lure new factories to provide jobs to the people.

kicking the can down the road it seems..

As much as I am for fiscal consolidation, this is a good move for the short term. Considering that the government is trying to inflate the economy, an increase in sales tax would be counterproductive.

Disillusioned

So, the 'come back kid' pulls yet another flip-flop on his policies.

Excuse me, sir. In June last year, the bill to increase consumption tax passed the parliament at the initiative of DPJ to which former LDP leader Tanigaki agreed. Tanigaki was kicked out of his office in the party soon after and Abe became the new LDP leader. Abe beat DPJ at the lower house election last December, and at the upper house election this month. The most likely reason for the DPJ's loss was consumption tax. Consumption tax increase is not Abe's policy. I do not see so much reason that he will stick to his opponent's policy.

So, the 'come back kid' pulls yet another flip-flop on his policies. It just shows that he has no idea what he is doing and is not worthy of being a country leader. Regardless of his policies, he should at least have the strength of his convictions. Abenomics is just a political smoke screen and has no real conclusive economic merit.

" found only 11% supporting the existing plan, compared with 58% who favor “flexibility” in the timing or scale of the increase and 27% who oppose raising the tax at all."

That 58% are people who are too timid to directly tell Abe to stuff his tax hike where the sun don't shine. No one I've spoken with about it supports any tax hike whatsoever, and they all remember the busts after the tax was first imposed and then raised. Abe is a fool.

Agree, even at 5% Japan too expensive. Income tax rates are pretty high here, certainly when compared to main Asian competitors. Nevertheless this was one of hiois promises so worrying that he is breaking some already.

Well Played Abe, well played, how about waitng for the world economy to recover get the yen rate down some more and when alittle bit of stability returns then review the tax hike, it must come at some stage but timing could be crucial, too soon and stifle any recovery and too late and the amount of the hike will not be enough to have an effect on the debt.

No one ever has liked increased taxes but japan needs to swallow its medicine sooner or later.

let us put aside politics.. and just have a referendum.

In Japan, when it comes to political-economy, the public is sidelined, mainstreet is ignored.. and whats more.. the media shuts up.

5 % is way lower than most places.

Which does make , of course, almost everything , currently, being more expensive than in most place.

At 5%, Japan and Canada have the lowest equivalent consumption taxes in the Organisation for Economic Co-operation and Development, OECD data shows.

Sorry MODERATOR but this is on topic as it shows other countries do not have, INCLUDING Canada, low sales tax. Either correct the story or stop comparing apples to oranges.

FYI, Canada dropped the GST from 7% down to 6% on July 1, 2006 and then dropped it to 5% on January 1, 2008. So this comparison to Canada is a lousy one because Japan wants to raise sales tax while Canada has lowered its. Funny too that Canada is doing far better in their economy then the other G8 nations. FYI, Canada has been lowering personal income taxes over the last 8 years and this has put more money into its citizens pockets. Japan is going the exact opposite way. How is that not on topic for an argument? Could it be because it's correct?!

So very much on topic, why would you raise taxes when your economy is weak and consumer spending is flat and risking a decline?

Increasing sales tax is never good for economic growth.

Abe's "determinations" to "fix Japan" already wavering now he has his election victory? Agree with other posters, surely the relative level of sales tax here and in other countries is relevant to this conversation. 5 % is way lower than most places.

In Japan raising the sales tax won't make a huge difference to the wealthy but to the poorer classes it will.Japan already penalizes the poor with tax on food and books and newspapers.Also,why aren't electronics for schools tax free? The LDP have shown that it favours the rich over the poor! Abenomics has rewarded Japanese businesses with higher share prices and very little else for its people!

Interesting title. So, the DPJ goes back on political promises and considered liars while the LDP "rethinks" them. So who has the media in their pocket?

Stay on topic please. Other countries are not relevant to this discussion.

I've been away awhile but Canada at 5% is an error

It is not. Canada's GST is 5%, however most provinces also have their own sales taxes. Quebec has a 10% tax which makes a total of 15%. Alberta doesn't have a provincial sales tax thus total tax is 5%. Unlike Japan, Canada has no plan to raise the sales tax.

At 5%, Japan and Canada have the lowest equivalent consumption taxes in the Organisation for Economic Co-operation and Development, OECD data shows.

I've been away awhile but Canada at 5% is an error

well, Abe may make up his mind by autumn but in the meantime he should scrap forced inflation target of 2% soon.