Bloomberg News

Abe Says Japan Sales Tax Increase Depends on April-June Economy

December 08, 2012

Japan’s Liberal Democratic Party Leader Shinzo Abe said he would decide whether to increase a sales tax next year based on economic conditions in the second quarter.

“It’s impossible to raise the tax if deflation deepens,” Abe said during a Fuji television program today. A decision will be made after data on economic conditions from April to June become available next August, he said.

Polls show the LDP, the largest opposition party, is on track to return to power it lost in 2009 after the Dec. 16 election, with an absolute majority in the Diet’s lower house. Abe, in line to become prime minister, has called for “unlimited” monetary easing to end more than a decade of falling prices.

Japanese Prime Minister Yoshihiko Noda won parliamentary approval in August for his bill to raise the country’s sales tax for the first time in 15 years.

The bill raises the tax to 8 percent in April 2014 and to 10 percent in 2015, and a clause allows for implementation to be canceled based on an assessment of economic conditions. The last sales tax increase in 1997 contributed to pushing the economy into a 20-month recession, costing then-premier Ryutaro Hashimoto his job.

To contact the reporter on this story: Takashi Hirokawa in Tokyo at thirokawa@bloomberg.net

To contact the editor responsible for this story: Jim McDonald at jmcdonald8@bloomberg.net


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