Finance Minister Taro Aso admits that the country needs to raise its taxes by next year if they want to show they are determined to fix up Japan’s finances, even as the government has already upgraded its view of the economy. Prime Minister Shinzo Abe has said he will decide later this year if they are going to push through with the scheduled tax increase.
The sales tax is scheduled to rise from 5 percent to 8 percent by April next year, and then to 10 percent by October of 2015. Abe has cited concerns that it will affect the economy negatively and so will be observing the conditions until autumn of this year when he will make a decision. But Aso said that delaying the increase would break their commitment to the G20 group of developed and developing nations that Japan would fix its financial situation that has been struggling for the past decade.
The government announced that for the third straight month, they are upgrading the view on the economy because deflation has been slowly easing and because of the massive monetary fiscal stimulus, there has been continuous growth. But Aso says the government still needs to consider the extra budget, especially since they have the largest public debt among industrialized nations that is more than twice its 500 trillion yen economy. The imminent sales tax hike will be proof that the government is committed to implement painful but necessary reforms. But Abe might be facing opposition on tax reforms from within his party, as some lawmakers are concerned it will weaken the world’s third largest economy.
[ via Yahoo ]