Thursday, 17th March 2016
In General Japan News,
Famed economist warns against sales tax hike in Japan
Joseph Stiglitz, an American Nobel Prize-winning economist, has warned against plans for a consumption tax hike in Japan.
The move is set to come into force in April 2017, but the famed analyst is urging Japanese prime minister Shinzo Abe to rethink the strategy.
Weaker than expected global economic conditions could mean that the hike had negative consequences for the country as a whole.
Mr Stiglitz said: “A consumption tax increase now is going in the wrong direction.”
He made the comments after attending an economics seminar with the prime minister and a number of other officials in the Japanese government.
A series of these events has been planned to allow the views of domestic and international experts in the world of global economics and financial conditions to be heard.
It is thought that the opinions expressed could influence policy going forward and could be a determining factor in whether the sales tax hike goes ahead as planned.
Mr Stiglitz added: “A few years ago, no one would have anticipated that the global economy would be as weak as it is today. When economic circumstances change, you have to adapt your policy to the new economic circumstance.”
The 2001 Nobel Prize winning economist admitted that Japan’s monetary policy has been very strong in the past, providing the country with the stimulation it needed in the economy.
He qualified this, however, by stating that the impact such policy can have has its limits and now, fiscal policy should be the focus.
Prior to the seminar attended by Mr Stiglitz, the Japanese prime minister had asked the analyst to offer candid opinions and that is exactly what Mr Ade received.
Only time will tell whether the economist’s viewpoint is taken into consideration and plans to raise the sales tax from eight per cent to ten per cent go ahead.