politics

Senior gov't official calls for Abe to delay sales tax hike

21 Comments
By Yoshifumi Takemoto

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21 Comments
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Increase sales tax and people will make do with what they have and buy less.

How's that going to fix anything?

3 ( +5 / -2 )

I already spend 3% less per pay check now and will do the same again if it rises.

3 ( +3 / -0 )

Go to the UK where its 20%......

-6 ( +2 / -8 )

You are quite correct to state that sales tax in the U.K. is 20%, however there is no tax on foods stuffs, newspapers or books, nor sales tax on children's clothes and shoes. The everyday costs for ordinary people is food, therefore a 10% sales tax hits the poorest most. Tax luxury items sush as cars, electrical products jewelry etc at say 20%, and the wealthy will pay a bigger share of the sales tax burden.

10 ( +11 / -1 )

This "top" "prominent" official doesn't have a name then? Who elected him/her anyway?

0 ( +2 / -2 )

the U.S. Treasury Department is pushing Tokyo not to go too fast on budget-balancing

Too fast on budget-balancing?

Tokyo?

Tokyo has only had this "goal" of achieving primary balance surplus for the past 10 years and more...

Back in the early 2000's they were talking about doing it by 2010... then by 2013... then by 2020... and there's talk now about slipping it further back. In the meantime the debt has gone up from some 400 trillion yen around 10 years ago to more than 1,000 trillion yen's worth now.

Hard to escape the conclusion that the goal is just a time-buying charade.

“What country has ever raised tax by 2 percentage points just a year and a half after a tax hike?” the senior official said.

What country has ever had debts so large?

“The logic that (the government must proceed) because the law was already decided doesn’t hold up.”

Errr... so if the government decides something (even with cross-party support), that doesn't mean that it should stick to what it has decided? If that's the case, why shouldn't the government just decide not to pay the interest payments on the debt or return the principal? Or just have the central bank buy all the debt? (oh...)

But Tokyo University economist Shin-ichi Fukuda said, “As long as the BOJ is buying large amounts of JGBs, a short-term rise in yields isn’t a big concern.” The 10-year JGB yields less than 0.5%.

That's right. No big concern. Just convert some yen into foreign currency to play it safe.

0 ( +1 / -1 )

I called this one a while back, as did others -- Abe's "neutrality" simply means he cannot make a decision either way. By April 2017 people will mention "Abenomics" even less than they are now (and notice the professor quoted in this article talks about "the positive points of Abenomics" and then goes on to talk about the April sales tax hike and negative impact on society as though the tax hike had nothing to do with Abenomics whatsoever?) except as a guide on what NOT to do, and Abe will have long been out of office and it will not be his choice to make.

-5 ( +1 / -6 )

What did they expect? They increased taxes without any economic incentives to increase spending and it flopped. Do you have to be an economist to see the failure of this? If they had half a brain they would have only increased taxes on imported goods to promote locally manufactured and grown goods, which would have meant the tax hike worked for the Japanese economy instead of against it.

-4 ( +1 / -5 )

Precisely

-1 ( +0 / -1 )

as though the tax hike had nothing to do with Abenomics whatsoever?

Actually, it has nothing to do with Abenomics because the tax hike was decided by Noda of DPJ. The main part of Abenomics is that printing money and lots of bond buying by BOJ. A great idea, but it was also done by shogun Tokugawa Ieyoshi in Edo era.

1 ( +3 / -2 )

This unprogressive tax hike is part of class warfare that is a component of the neoliberal agenda to transfer huge amounts of public money into relatively few private hands. Anyone who doubts this only has to look at who is in favour of this tax increase -- "powerful interests like the Finance Ministry, the Bank of Japan and major corporations". Yes, Japan has a huge and increasing deficit, but there are many other ways to address this besides an across-the-board consumption tax, including reduced corporate welfare expenditures and the establishment of a fairer social security and tax system, where those with greater means take up a bigger burden (the trend for the past decade has been in the other direction).

0 ( +2 / -2 )

"Abe raised the sales tax to 8% from 5% in April, the first of a planned two-stage increase that is the boldest attempt in nearly two decades to curb public debt that is well over twice the size of the economy."

Two words say it all; public debt. Private citizens are not racking up debt;it is the public servants who are doing that. We private citizens on the other hand look at how much money has come in from employment, lament how much has gone out in taxes, and then we make tough decisions. It's far beyond time for government to do the same. Memo to Mr. Kuroda (Bank of Japan governor) and the Finance Ministry; it doesn' t matter how much you increase the tax if you spent over a 100% of what you collect. If you want a tax increase then make sure you match it yen-for-yen with government cuts. If you want a 3% tax increase then there should be a three percent reduction in pay, bonuses, etc,for as long as that tax remains.

3 ( +4 / -1 )

LOL cant wait to hear what excuses Abe comes up for next years certain Tax hike. difficult to screw the public and keep up the popularity ratings

1 ( +2 / -1 )

“I think it should be delayed” by a year and a half to April 2017, the prominent official told a small group of people in a recent conversation on condition of anonymity

First off it can't be THAT small of a group of people if it's being reported here. Second, it's been known that Abe likes throwing out trial balloons every once in a while.

Lastly this SHOULD read....."It should be CANCELLED and the previous increase rolled back to 5% as it has been proven to be a failure in every sense of the word"

-1 ( +2 / -3 )

The principle of leaving money in people's pockets so thye can spend it as they see fit is one that i support. nevertheless in an overall economic context delaying or going ahead witll make no difference as the Government (supportrd by BoJ) will anyway keep borrowing like crazy to support the tepid economy. and print money to try and pay the debt. Doomed, we are all doomed.

0 ( +2 / -2 )

Sales tax is regressive as hurts poor more than wealthy. and anyway proceeds will not be used to pay down debt. abe's policies are a sham and one day the bill will have to be paid (in vastly devalyued yen).

2 ( +3 / -1 )

The total net savings of the private sector equal the amount of government debt.

This equation is one of the basics in the macro economics. You can see that in the "flow of funds" tables issued by central banks. http://www.federalreserve.gov/releases/z1/current/z1.pdf See "Flow of Funds Matrix for 2013" on page 16.

Now, if somehow the government balances the budget in the long run and the government debt becomes zero, so is the total net savings of the private sector. Who wants that happen?

2 ( +4 / -2 )

@CH3CHO

Good point. Put another way, a deficit in the public sector is matched by equivalent surpluses elsewhere. The debt hawks have not got around to figuring out where that surplus might lie. They live in a one-dimensional world, and sadly we all must pay for their short-sightedness.

2 ( +3 / -1 )

Who is this "senior/top/prominent" government official?

1 ( +1 / -0 )

Since when has Abe heeded anyone's advice or wishes? The man will do as he pleases and damn the rest of us

2 ( +2 / -0 )

I would trade places with the prices and tax of fruit and vegetables in the UK. Sure...apples for about 60 yen, etc.

1 ( +1 / -0 )

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