The Japanese government on Monday announced a much anticipated sales tax hike in 2019 to address the nation’s huge public debt, despite warnings it could hobble growth in the world’s third-biggest economy. The point-of-sale tax will rise from eight percent to 10 percent from October
The Japanese government on Monday announced a much anticipated sales tax hike in 2019 to address the nation’s huge public debt, despite warnings it could hobble growth in the world’s third-biggest economy.
The point-of-sale tax will rise from eight percent to 10 percent from October next year as aging and heavily indebted Japan battles to finance snowballing social security bills — especially medical fees.
The tax rise was originally planned for October 2015 but was pushed back twice due to fears it could derail the fragile economy.
The last such move — in April 2014 — was blamed for tipping Japan into a brief recession.
This time, Prime Minister Shinzo Abe believes he can avoid a sharp decline in consumer spending by introducing measures to cushion the blow.
The government “will do its best to avoid a negative impact on the economy by taking every possible measure,” Chief Cabinet Secretary Yoshihide Suga told reporters.
However, Suga added that the planned hike could still be scrapped if there were a potentially historic recession like a global slump triggered by the 2008 collapse of Lehman Brothers.
