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Friday, 27th May 2016
In Business In Japan,

Japan set to go forward with sales hike

Japanese finance minister Taro Aso has explained that the country will go forward with a sales tax increase in 2017. 

The government has said it is looking to raise the levy to ten per cent from the eight per cent announced in April next year, with the only exception being a financial crisis or a significant natural disaster. 

Mr Aso is looking over the country’s fiscal policy and said that the country needs to show the global community that it is looking to improve its finances and have a more positive impact on the world stage. In the G7 finance leaders’ meeting, he explained how he told US treasury secretary Jack Lew that Japan will proceed with the sales rise. 

A parliament speech reported by Reuters recorded Mr Aso as saying: “Raising the sales tax is a very important factor in maintaining trust in Japan's finances.”

However, prime minister Shinzo Abe recently suggested that delaying the tax hike could be a better move after an increase in 2014 had a negative impact on the economy.  

Japan recently escaped recession in the first quarter of the year and economic experts believe its best case scenario is posting modest growth in the current quarter due to weak emerging market demand. 

Another key factor is poor wage growth, which is having an adverse effect on exports and consumption across the country. 

In order to improve the country’s economy, Japanese Prime Minister Shinzo Abe explained at the summit that the US, EU and Japan should reach agreements on a number of trade negotiations to extend mutual market access. 

Leaders at the summit also explained how Britain leaving the EU could potentially cause a shock to global business. Other issues for the countries were protectionism, trade barriers and the effects of overcapacity, while issues in China’s steel market also raised concern.