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Japan: Gov't Establishes Expert Panel to Debate Planned Second Tax Rise
Source: www.japantoday.com
Source Date: Sunday, November 02, 2014
Focus: ICT for MDGs
Country: Japan
Created: Nov 11, 2014

Japan’s government has established a panel of experts to debate proposals for another sales tax rise next year, laying the groundwork for Prime Minister Shinzo Abe’s decision by year-end on whether to press ahead.

The government increased the sales tax hike to 8% from 5% in April, pushing the world’s third largest economy into the deepest slump in the second quarter since the 2009 global financial crisis.

The fragility of the subsequent recovery has cast doubt over the wisdom of pushing ahead with plans for a second increase in the tax rate to 10% in October next year.

The panel, which includes at least 42 private-sector experts will hold five debates in November, before submitting its recommendations to the government’s top economic council.

Two economic advisers to the prime minister who are wary of raising the tax again, Koichi Hamada and Etsuro Honda, are also sitting on the panel.

The other experts include business leaders, professors, economists, consumer representatives, labor unionists, and heads of local governments and agricultural cooperatives.

The panel meetings will be attended by Economy Minister Akira Amari, Finance Minister Taro Aso and Bank of Japan Governor Haruhiko Kuroda.

The majority of panel members is believed to be in favor of going ahead with the tax increase, in order to maintain trust in public finances. Japan’s public debt is twice the size of its economy, and the worst in the developed world.

“The opinions of the panel members won’t directly lead to a decision (on the sales tax rise). But, they will provide important input for making the decision,” Amari told reporters after launching the panel.

“I also want to hear whether they feel Abenomics is making steady progress, or whether they see any areas that should be propped up. I want to seek their view about the present state of economy and the progress on conquering deflation.”

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