Japan sends mixed signals on tax hike

To hike or not to hike?

That is the question. Actually, the question is does the right hand of the Japanese government know what the left hand is doing?

Japan’s Chief Cabinet Secretary Yoshihide Suga told a news conference Friday that the government would postpone its scheduled increase in the consumption tax if the move looks like it would weaken the economy and reduce total tax revenues.

signalsPreviously, the government had said it planned in April 2017 to raise the unpopular tax to 10% from the current 8% in unless the economy suffered a serious economic shock.

While Suga’s statement looks like the government is seriously backpedaling on its plan, he said its basic stance remains unchanged. But how can that be? Even the casual observer can see these are mutually exclusive.

Suga then added, as if he wasn’t blatantly contradicting himself, “I don’t think it’s possible the government will raise the tax rate if tax revenues are expected to be reduced.”

Of course, he may just be covering his backside. Earlier in the day, his boss, Prime Minister Shinzo Abe reportedly told a Lower House session that he is planning to raise the sales tax as scheduled in April next year.

Abe also denied he would dissolve the Lower House after announcing a postponement of the tax hike, as he did in November 2014, which led to the landslide victory of the ruling Liberal Democratic Party and Komeito coalition, reported the Japan Times.

So which is it?

“As of now I’m thinking to raise the tax exactly as planned. I’m not thinking of dissolving (the Lower House) at all,” Abe said, in comments reported by Kyodo News.



Categories: Asia Unhedged, Japan

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