• Kyodo

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The business community voiced mixed reactions Tuesday to Prime Minister Shinzo Abe’s decision to delay the next consumption tax hike and call a snap election for the Lower House.

“We were concerned about slowing consumption,” an official at a restaurant chain said, welcoming Abe’s decision to delay for 18 months the consumption tax hike to 10 percent scheduled for next October. The increase to 8 percent last April weighed on consumer sentiment and caused the economy to contract for two consecutive quarters through September.

An official at a major carmaker echoed this view, saying: “As we’ve been suffering a serious slump in domestic sales. The decision to put off the tax hike is not misguided.”

While praising Abe’s move, an official with a large mobile phone carrier said the administration should focus on taking every step necessary to avert an economic downturn.

Keidanren, the nation’s most powerful business lobby, released a statement saying Abe had made a “far-reaching decision.”

The federation had requested that the government raise the consumption tax to 10 percent next October as planned to underscore the nation’s commitment to improving its fiscal health, the worst among major developed countries.

“It is necessary to clearly show both within and outside the country a new pathway toward fiscal restoration,” Keidanren Chairman Sadayuki Sakakibara said in the statement.

He also urged the administration to devise a stimulus package to help “expand further a ‘virtuous economic cycle.’ ”

A food manufacturer executive also noted the need for fiscal discipline but said that given Abe’s tax decision, he is “more worried about the possibility that other countries may think Japan’s economy is in such bad shape.”

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