The government will examine steps to soften the impact of a consumption tax hike to be applied next year after a previous increase dampened consumption, the top government spokesman said Friday.
A task force involving officials from relevant ministries was launched on Friday, and the government is expected to study how to control economic fluctuations — particularly in consumption — as the nation braces for the tax hike from the current 8 percent to 10 percent in 2019.
“In view of what we experienced when the consumption tax rate was raised in 2014, we will learn from examples in Europe and examine specific steps to control economic fluctuations … so that changes in demand can level off,” Chief Cabinet Secretary Yoshihide Suga said.
The nation saw a last-minute surge in demand ahead of the 2014 tax hike but consumption took a hit afterward. The economy is now in its second-longest postwar expansion cycle with the help of a pickup in private consumption, a key component of gross domestic product.
The government plans to allocate part of the revenue from the tax increase to realize Prime Minister Shinzo Abe’s goal of expanding child care support and free education.
Private-sector members of the Council on Economic and Fiscal Policy said the government should include ways to limit the adverse impact on spending in a state budget for the fiscal year starting in April 2019.