Japan Growth Strategy Plan Reiterates Need for Sales Tax Hike (Bloomberg)
Last Modified: 01:02 AM, Tue Jun 11, 2019

Yuko Takeo and Emi Urabe

Bloomberg. 11 June 2019

Word Count: 253

This is for Research purpose only

(Bloomberg) -- Japan will go ahead with a sales tax increase in October but will also be prepared to put together an additional spending package if the economy takes a turn for the worse, according to a new mid-term economic plan, submitted by a government panel led by Prime Minister Shinzo Abe on Tuesday.

The main points of the plan are almost certain to become government policy given that the panel includes six Cabinet members, including Abe, and Bank of Japan Governor Haruhiko Kuroda. The plan makes no changes to Japan’s fiscal consolidation goals.

A draft of the plan released by the Cabinet Office showed that the government intends to use the extra proceeds from raising the sales tax to 10% to shore up social security funding and fund policies to tackle the low birth rate.

The plan said the government will "not hesitate" to deploy macroeconomic policies as needed if risks to the economy materialize.

The mid-term economic plan also included the following points:

  • Government to focus on raising potential growth rate by focusing on next generation technologies, industries, and sustainability as lifespans increase
  • Will introduce a three-year support program for those of the so-called lost generation who face lower income levels
  • Efforts for raising the minimum wage
  • Enhancing employment for the elderly
  • Plan aims to reach primary balance and a 600 trillion yen economy by fiscal year 2025
  • Expects BOJ to achieve its 2% price stability target "as soon as possible" through monetary easing, while considering the economy, prices and financial conditions

To contact the reporters on this story: Yuko Takeo in Tokyo at ytakeo2@bloomberg.net;Emi Urabe in Tokyo at eurabe@bloomberg.net

To contact the editors responsible for this story: Malcolm Scott at mscott23@bloomberg.net, Paul Jackson

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Publication: Bloomberg
Slugline: BC-Japan-Growth-Strategy-Plan-Reiterates-Need-for-Sales-Tax-Hike