Friday, 30th December 2011
In Business In Japan,
DPJ agrees to postpone sales tax hike
The Japanese government has decided to postpone the implementation of a sales tax hike following widespread opposition to the proposal.
The country's prime minister Yoshihiko Noda was hoping to double the sales tax which currently stands at five per cent in a bid to help cut the country's debt.
However, the ruling Democratic Party of Japan agreed to put off the increase until April 2014, when it will rise to eight per cent before a further increase in October 2015.
The tax increase had been due to come into effect by April 2013 and the revised timetable has been announced just a few days after Japan revealed a 90.3 trillion yen (£742 billion) draft budget for the 2012-13 financial year, the BBC reported.
Some analysts believe that the postponement will stretch Japan's budget to the limit, with costly work still to be carried out following disasters in March.
Speaking to the BBC, Martin Schulz from the Fujitsu Research Institute said: "The tax increase would have counterbalanced the budget that the government have drafted."
Meanwhile, figures from the Centre for Economic and Business Research in London have shown that Japan remains the world's third biggest economy.
Written by Kimberley Homer
Related news stories:
DPJ rejects Bank of Japan's new head (12th March 2008)