Wednesday, 1st June 2016
In General Japan News,
Japan postpones sales tax increase until 2019
A planned increase in sales tax in Japan has been postponed until 2019, meaning it will stay at eight per cent, instead of going up to ten per cent.
Prime minister Shinzo Abe has made the announcement, saying he aims to speed up his so-called Abenomics policy, to counteract ten years of deflation and help stimulate the economy.
In 1989 when the sales tax was first introduced it stood at three per cent, but has steadily risen since then.
Mr Abe addressed MPs in his Liberal Democratic Party today (June 1st), stating: "I want to fulfil my responsibility by accelerating Abenomics more and more."
Plans to hike the sales tax to ten per cent were originally due to come into force in October last year, but were postponed until April 2017.
Now, this date has also been shelved, putting the expected implementation of the policy even further back.
Japan’s ageing and shrinking population means that fewer people are contributing to an economy that relies heavily on domestic consumption.
The Bank of Japan aimed to help address this situation earlier in the year when it introduced a negative interest rate policy of -0.1 per cent.
It was the first time that negative rates had been brought in by Japan and came as a surprise to many economists.
The intention was to increase the amount of investment and spending in the country and in turn, improve the economy.
As it was only implemented in January, there is still time to wait in order to measure its impact.
The decision to postpone the sales tax could mean a snap election is called, as the hike has been enshrined in law to go ahead in April next year.
A national vote could gauge the feeling of the public on a matter that would affect the entire population.