Japan Needs $20b to Avoid Tax Hike
World Economy

Japan Needs $20b to Avoid Tax Hike

It could be difficult for the Bank of Japan to taper its record monetary stimulus before a planned sales-tax hike in 2017 and the government may need to compile a ¥2.5 trillion ($20 billion) economic package to cushion the blow to households, an adviser to the prime minister said.
Etsuro Honda, who has known Prime Minister Shinzo Abe for three decades and advises him on economic matters, said the government would need to “take a cautious approach” after an increase in the levy last year sparked a recession, Bloomberg reported.
“Fiscal spending of about 2.5 trillion yen will probably be needed to counter the impact,” Honda said in an interview at the prime minister’s office in Tokyo on Tuesday.
Abe’s government is walking a fine line as it tries to rein in a debt burden that’s more than twice the size of the nation’s annual economic output. At the same time, Abe’s hand-picked central bank chief, Haruhiko Kuroda, is pumping money into the economy to rekindle inflation that Japan needs for growth.
Tapering before April 2017 “is a bit hard to imagine,” said Honda. “The BOJ will have to judge whether it can taper by looking at the degree of deceleration after the tax hike. When the economy is slowing, it can’t start tapering.”
An increase in the tax from 5% to 8% in April last year sparked two quarters of economic contraction, even after Abe unveiled a ¥5.5 trillion stimulus package in December 2013. The next planned move would take the levy to 10%.
Honda was instrumental in persuading Abe last year to postpone the next hike by 18 months to April 2017.


Short URL : http://goo.gl/Jkso5y

You can also read ...

Qatar Capable of Overcoming Siege Challenges
Qatar affirmed its ability to overcome the challenges of the...
Japan Inflation Inches Higher
Japan’s inflation picked up slightly in June, largely because...
Apple Inc won guarantees from the Trump administration that its lucrative iPhones would ship from China  without being subject to tariffs.
Big companies in the United States from Amazon.com Inc to...
Today, income inequality in the US is greatest among Asians. Asians displaced blacks as the most economically divided racial or ethnic group in the US.
The rich are getting richer and the poor are getting poorer in...
State-Actors Likely Behind Singapore Cyberattack
State-actors were likely behind Singapore’s biggest ever...
S&P Affirms Russia’s Stable Outlook
Standard & Poor’s said in a statement on Friday that it...
Argentina Making Fiscal Progress
Argentina is “unequivocally” making progress on its goals to...
Growing Inflation Looms Large Over India’s Economy
From rising crude oil prices to a poor start to rice-planting...