Abe to postpone tax hike, call December election: report

Kyodo, Reuters

Japan appears headed for a Dec. 14 general election, with an official from the ruling coalition saying Wednesday that Prime Minister Shinzo Abe is preparing to dissolve the Lower House and go to the polls.

Before his departure last Sunday for a regional economic summit in Beijing, Abe mentioned to senior members of his Liberal Democratic Party and coalition partner Komeito that he may dissolve the Lower House on Nov. 19 and hold an election by the end of the year, with Dec. 14 being the most likely election date, the official said. Another option would be Dec. 21.

Many in the Abe administration expect the prime minister will announce plans to delay a planned increase in the consumption tax to April 2017 from October 2015 — a decision apparently linked to the potential dissolution of the Lower House.

Analysts also say that Abe hopes to take advantage of an opposition that’s in disarray and ill-prepared for a snap poll. According to political insiders, Abe, whose support is relatively high but falling, might seek to lock in his mandate before taking unpopular steps next year such as restarting nuclear reactors and passing legislation to allow the Self-Defense Forces to fight abroad for the first time since World War II.

Abe is expected to make a final decision after speaking with administration officials on the timing of the election after he returns next Monday from Australia, the last stop on his three-country tour.

Major political parties have already begun gearing up for a possible election, with opposition politicians saying that a delay in the tax hike would show that the prime minister’s “Abenomics” growth policies have failed.

No election need be called until December 2016, when the four-year term of current Lower House members expires.

Abe raised the consumption tax to 8 percent from 5 percent in April, part of a two-stage plan to rein in huge public debt. The hike brought about the nation’s biggest economic contraction since the global financial crisis.

Abe has said he will decide on whether to proceed with the second stage of the tax increase to 10 percent after seeing third-quarter GDP data.

However, according to a report Wednesday morning, Abe has already made up his mind to delay the tax hike, as third-quarter GDP is likely to be weak. He would then take the issue to voters on the premise that the delayed tax hike to April 2017 would exceed the current Lower House term, the conservative Sankei Shimbun reported.

Voter support for the LDP slipped to 36.6 percent in an NHK survey released on Monday. That dwarfed the 7.9 percent who backed the opposition Democratic Party of Japan, likely due to memories of the party’s three years in power from 2009, a period marked by policy flip-flops and missteps. Still, 40 percent of those surveyed backed no particular party.

Abe returned to power in December 2012, pledging to revive the economy with a mix of hyper-easy monetary policy, spending and reforms.

The prime minister inherited the plan to raise the sales tax from his predecessor, Yoshihiko Noda. That DPJ-led government, with the backing of the then-opposition LDP and its ally, agreed on the plan to double the sales tax to 10 percent in two stages to fund rising social security costs and curb the nation’s ballooning debt.

Abe, though, has argued that to achieve fiscal reform, Japan must tame deflation and get the economy growing.

  • http://www.sheldonthinks.com/ Andrew Sheldon

    Oh…Praise “Abe the Considerate” He just printed an enormous amount of money. That’s better than discretionary GST spending. He just raised taxes and people won’t realise. And he’ll go for more with a new mandate.