Japan 'should go to polls if sales tax hike delayed'

Mr Aso (left) made the remarks after Abe aide Hakubun Shimomura (right) said Japan might delay its sales tax hike for 2½ years from April 2017.
Mr Aso (above) made the remarks after Abe aide Hakubun Shimomura said Japan might delay its sales tax hike for 2½ years from April 2017.
Mr Aso (left) made the remarks after Abe aide Hakubun Shimomura (right) said Japan might delay its sales tax hike for 2½ years from April 2017.
Mr Aso made the remarks after Abe aide Hakubun Shimomura (above) said Japan might delay its sales tax hike for 2½ years from April 2017.

Finance Minister reiterates call after Abe's aide says it may be postponed for a few years

TOKYO • Japan's Finance Minister Taro Aso said yesterday that the Japanese people should have their say on a proposed delay to an increase in the country's consumption tax.

"We should go to the people," he said at a ruling party meeting in Yokohama, referring to his earlier call for Parliament to be dissolved and a general election held if the tax hike is delayed.

His remarks came after Mr Hakubun Shimomura, an aide to Prime Minister Shinzo Abe, said Japan will probably delay increasing its sales tax for 2½ years from April next year because the government needs to give priority to economic recovery.

"We have no other options but to postpone the sales-tax increase," Mr Shimomura said on a Fuji television news broadcast. "If the increase means a decline in tax revenue for the government, that would threaten the achievement of the goals under Abenomics."

Mr Abe has said he will make a decision before an Upper House election this summer on whether to go ahead with a planned increase in the levy next April to 10 per cent, from 8 per cent at present.

He had previously said the matter would be decided at an appropriate time and that it would be postponed only if there was a shock on the scale of a major earthquake or a corporate collapse like that of Lehman Brothers.

An increase in the levy in 2014 pushed Japan into a recession.

The prime minister told Mr Aso and the ruling Liberal Democratic Party's (LDP) Secretary-General Sadakazu Tanigaki on Saturday to delay the sales-tax increase to October 2019, NHK reported.

If Mr Abe fails to go ahead with his plan of raising the tax in April, it means his economic policies have failed and he and his Cabinet members should resign to take responsibility, Mr Tetsuro Fukuyama, vice-secretary-general of the opposition Democratic Party of Japan, said on a programme by public broadcaster NHK yesterday.

Officials from the Japanese Communist Party and the Social Democratic Party backed Mr Fukuyama's demand, Kyodo news reported.

Mr Abe warned at a Group of Seven (G-7) leaders' meeting last week that the global economy faces significant risks of another crisis.

While the Japanese leader failed in a bid to have the G-7 include his warning in a communique issued last Friday, he referenced the "Lehman shock" repeatedly in a press conference and said the world economy is threatened by a prolonged slowdown in demand.

Since the previous tax increase in 2014, Japan's economy has moved back and forth between contraction and growth. Consumer spending remains weak and inflation data released on Friday show that prices are falling again.

If delayed, it would be Mr Abe's second postponement as the tax was initially scheduled to be raised last October.

"Japan is in economic conditions that require a delay to the sales-tax increase," Mr Yasufumi Tanahashi, LDP's acting secretary-general, said on the NHK programme. It is natural for Japan to take proactive measures as risks to global economies are increasing, he said.

A slowdown in the Chinese economy and weaker equities markets are also having negative effects on Japanese consumer spending, Mr Tanahashi said.

REUTERS, BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on May 30, 2016, with the headline 'Japan 'should go to polls if sales tax hike delayed''. Print Edition | Subscribe