Japan Contemplates Consumption Tax Increase
You know the world’s gone a bit topsy-turvy when the Japanese Government is determined to go ahead with a consumption tax increase and the International Monetary Fund is urging it not to be so gung-ho.
Normally it’s the other way around; it’s the IMF, along with other rich nation quangos like the OECD, telling Japan, the world’s most-indebted country, to hike consumption tax or face fiscal and economic crisis, while Japan itself demurs, petrified at the thought of another recession. But following the recent snap election in Japan, which gave Prime Minister Shinzo Abe a fresh mandate, it is Japan itself that seems prepared to bite the bullet and hike consumption tax in two years’ time, with the IMF worrying about the consequences of such a move on the economy, according to its most recent country report for Japan.
In a sense, the news that Abe’s Government is sticking to its consumption tax plans is good news. Few people relish a tax increase, but at least taxpayers now know well in advance that a consumption tax rise is coming down the track.
Then again, if a week is a long time in politics, then two years must be an epoch. A lot can change between now and the scheduled consumption tax rise in October 2019. And the relevant legislation does give the Government of the day a certain amount of wiggle room to further postpone the measure, should economic conditions deteriorate, so this is far from set in stone. But things are about as certain as the can be.
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