Land of rising tax: Prime Minister Shinzo Abe moves to tackle Japan's debt
Tuesday 01 October 2013
The latest round of Abenomics in Japan boosted shares in the world’s third largest economy today, offsetting the impact of the first US fiscal shutdown for 17 years.
Prime Minister Shinzo Abe ended months of speculation by raising the country’s sales tax from April next year in a move supporters believe is critical to tackling the country’s national debt.
Abe will also unveil an economic stimulus package to “ease the impact” of the rise, which others claim could derail Japan’s economic recovery. The package is expected to include benefits for low-income earners and incentives to boost investment and wages.
The news came as the Bank of Japan’s quarterly “tankan” survey showed that sentiment among large Japanese manufacturers was at a six-year high. Abe said the survey had been a key factor in his decision to raise taxes.
“To maintain faith in the country, and to pass on a sustainable social security system to the next generation, I have decided to raise the combined national and regional consumption tax rate from 5% to 8%,” he said.
The Nikkei share index closed up 0.2% at 14,484.72, having risen as much as 1.3%. The gains were pared by the US budget stalemate, which President Barack Obama warned would “throw a wrench” into the recovery.
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