The Abe administration appears inclined to raise the consumption tax from April 2014. The consumption tax increase bill, enacted in the summer of 2012, includes a clause that the consumption tax rate will be increased from the current 5 percent to 8 percent next April if the economy grows 3 percent in nominal terms and 2 percent in real terms.
In its latest move toward the tax hike, the government succeeded in persuading the Diet to enact a bill to help small and medium-size companies pass on the increased tax burden to consumers. The government hopes to have the bill take effect from October.
The move is seen as laying the foundation for increasing the consumption tax rate. But the government must handle the issue of the consumption tax raise by carefully considering Japan's economic condition.