Business / Economy

Ministers play down Abe aide's comment suggesting Japan consumption tax hike could be delayed

Kyodo

Cabinet ministers on Friday played down remarks made the previous day by a close aide to Prime Minister Shinzo Abe hinting at a delay of the consumption tax hike long planned for October.

The government has maintained that the consumption tax will be raised from 8 percent to 10 percent unless the economy suffers a shock on the scale of the global financial crisis triggered by the 2008 collapse of U.S. investment bank Lehman Brothers Holdings Inc.

“It is necessary to raise the tax … to secure a stable source of revenue for a social security system oriented to all generations in dealing with the biggest challenge of a declining birthrate and aging population,” Finance Minister Taro Aso said at a news conference.

Chief Cabinet Secretary Yoshihide Suga also reiterated the government policy, after Koichi Hagiuda, executive acting secretary-general of Abe’s Liberal Democratic Party, said Thursday, “If the Bank of Japan’s tankan (business sentiment) survey for June shows a risky outlook … there would be a different development.”

The BOJ will release the next quarterly tankan business confidence survey on July 1. Hagiuda told reporters Friday his remarks had represented his “personal view” and that he did “not intend to object to the government’s policy.”

Health minister Takumi Nemoto said, “It is important to fully prepare for the tax increase,” while education minister Masahiko Shibayama said, “We have a consistent stance to raise the tax after taking every possible measure against a possible reduction in demand.”

Aso suggested Hagiuda’s stance had not been widely known by high-ranking ruling party lawmakers and members of the government before his comments, saying, “At least Mr. (Toshihiro) Nikai and some others didn’t know about it in advance,” referring to the LDP secretary general.

Abe has postponed the plan to increase consumption tax twice — first from October 2015 to April 2017, and then to October 2019 — after the previous hike from 5 percent in April 2014 dented consumer spending and hurt the economy.

Signs of weakness in Japan’s economy shown by some economic indicators amid a slowdown in the Chinese economy have reinforced speculation that Abe may put off raising the consumption tax again.