Fate of Sales Tax Will Be Decided in December

January 13, 2014 Taxation in Japan

TOKYO – The government of Japan will closely look into how tax hikes will affect the national economy, before making a final decision on the 2 percent increase to sales tax currently planned to be implemented in 2015.

In a televised interview on January 12th the Minister of State for Economic Revitalization Akira Amari indicated that the Japanese government may implement financial measures in order to counteract the potential negative effects that further tax increases could have on the country’s economy.

The government of JJapan is planning a two-step rise to the rate of the national sales tax, with the first stage of 3 percent confirmed to be implemented in April 2014, and the second step of 2 percent still being discussed, and tentatively scheduled for April 2015..

Akira Amari stated that the decision on whether the second hike will go ahead will be made by the Prime Minister Shinzo Abe in December 2014, after the initial effects of the first tax hike can be analyzed and evaluated.

According to Akira Amari, it is absolutely necessary for Japan to “…take action to avoid negative effects or an economic slowdown as a result of the sales tax increase,” and “…we have to think of the possible consequences carefully, like we did for the decision to raise it to 8 percent, or even more carefully.”

The tax hikes have been a highly controversial topic in Japan, although the idea has recently gained support from the public, with a poll conducted by national media last week showing that more than three quarters of business owners now think that the hike, and the accompanying fiscal stimulus measures, will help the country achieve an economic recovery.

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