(Sankei: February 25, 2016 – p. 1)
At a House of Representatives Finance Committee session on Feb. 24, Prime Minister Shinzo Abe indicated that a political decision could be made to cancel the plan to raise the consumption tax rate to 10% in April 2017 if the global economy “drastically worsens.”
As possible cases for which the tax hike could be postponed, Abe has cited incidents like the Lehman crisis and the Great East Japan Earthquake. He made the comment in response to a question from Japanese Communist Party member Toru Miyamoto. However, he emphatically said he “has not changed” his mind about carrying out the tax increase as planned. He also stated: “With determination to create an economic situation that ensures that the tax rate can be raised to 10%, I will take all possible measures for financial and fiscal management.
The government initially planned to raise the consumption tax to 10% in October 2015, but Abe announced in November 2014 the postponement of the tax hike by 18 months. However, the government removed a clause that allowed it to suspend the tax increase if the economy worsened.
In reaction, Etsuro Honda, an advisor to the Cabinet Secretariat, has called for another postponement of the tax hike in consideration of a possible negative impact on consumption.
Meanwhile, Finance Minister Taro Aso emphasized at the same committee session on the Feb. 24, “Unless a serious incident occurs, we will definitely implement” the consumption tax hike to 10%. He also said, “It is extremely difficult to state specific conditions,” but cited employment, business performance, and share prices as examples of “serious situations.”