Adam Posen is sticking to his guns in recommending that Prime Minister Shinzo Abe raise the consumption tax.

While acknowledging the levy is not likely to be raised to 10 percent as scheduled next October, Posen, the president of the Washington-based Peterson Institute for International Economics, says there are still compelling reasons to do so even after Japan unexpectedly slid into recession last quarter.

That second successive quarterly contraction in the world’s third-largest economy followed a boost in the consumption tax to 8 percent in April and probably guarantees Abe will postpone the planned increase and declare a snap election.

The stance puts Posen at odds with other economists, including Nobel laureate Paul Krugman and Richard Koo, the chief economist at Nomura Research Institute.

Krugman this month urged Abe to delay the tax hike, according to the prime minister’s adviser, Etsuro Honda. Koo says raising the tax again would be economic suicide.

“The least bad option is to go ahead with it,” said Posen, a former Bank of England monetary policymaker. “Some people I agree with are saying they should put it off. It is reasonable to argue either way.”

Posen, who has also worked at the Federal Reserve Bank of New York, has written several books and studies on Japan’s economic woes and is a frequent visitor to Tokyo as an adviser to policymakers.

Posen maintains that a higher tax is still necessary to deal with a public debt equivalent to 226 percent of gross domestic product and that paying it down is needed especially because most bondholders are locals.

That means they and the wider economy would be hurt by any fall in the price of the bonds or a default.

“The uncertainty of the fiscal situation is for real,” Posen said. “Because there are no foreign debt holders of Japanese bonds you are reneging on your own people. If you default you’re not getting rid of anything.”

He notes the share of the economy devoted to taxes is still relatively low, with Japan’s sales tax less than the 20 percent rate in the U.K. and France and the 19 percent in Germany. The nation’s unemployment rate dropped to 3.6 percent in September from 4 percent a year earlier, while consumer prices excluding fresh food increased 3 percent over the previous 12 months, following two decades of deflation.

“At some point you need to increase the value-added tax,” Posen said, using another name for the sales tax. “Do you do it or do you wait?”

Where Posen is willing to give ground is on his September suggestion that a postponement of the increase would run “a real risk of crashing the stock market.” Instead, even with such speculation, the Nikkei stock average is up 3.4 percent this month.

“I’m glad to be wrong on that, but I still think it’s a mistake” not to raise the tax, he said.

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