Abe Decides to Raise Consumption Tax as Scheduled

October 15, 2018

Tokyo- Japanese Prime Minister Shinzo Abe has decided to increase the consumption tax rate from 8 pct to 10 pct in October next year as planned to secure funds to carry out programs to realize a social security system that will be beneficial for all generations, sources close to him said Sunday.

Abe has judged it possible to limit the tax hike's negative effects on the Japanese economy by implementing stimulus measures, they said.

To sustain personal demand after the hike, the government is considering giving 2 pct point rewards to cashless purchasers at small and midsize retailers and subsidies to help small retailers ready for cashless payment.

On top of keeping applying the 8 pct rate to food and nonalcoholic beverages excluding those for in-store consumption, tax breaks for automobile and home purchases could be implemented.

According to the sources, the government will have a meeting with the ruling Liberal Democratic Party and its coalition partner, Komeito, on Monday to discuss a supplementary budget for the current fiscal year through next March to chiefly fund postdisaster recovery measures. Attendants in the meeting will include Abe, Finance Minister Taro Aso and LDP Secretary-General Toshihiro Nikai.

Later in the day, Abe will hold an extraordinary cabinet meeting to adopt the extra budget. At the meeting, he will instruct relevant ministers to compile stimulus measures after making it clear that the tax will be raised without a further delay.

In 2012, the then ruling Democratic Party and the LDP-Komeito team agreed to increase the consumption tax from 5 pct to 8 pct in April 2014 and from 8 pct to 10 pct in October 2015. After returning to power, Abe carried out the hike to 8 pct as agreed but put off the increase to 10 pct twice. Jiji Press