TOKYO, Jan 22: Japan will raise its sales tax to 10 percent from 8 percent in April 2017 “without fail” in order to win trust from markets and other countries, Finance Minister Taro Aso said on Friday. Aso made the pledge in a fiscal policy speech to parliament as speculation lingers among some market players that the government may again postpone the second stage of its tax hike plan. It has already delayed the move by 18 months after the first tax hike in April 2014 pushed the economy into recession. Prime Minister Shinzo Abe has vowed to go ahead with the 2017 tax hike barring a big economic shock. In contrast to the finance minister’s firm pledge, however, Abe made just a brief reference to the planned sales tax increase in a separate policy speech in parliament on Friday. The tax increases are seen by investors as a crucial step towards fixing the developed world’s heaviest debt burden. Aso also vowed to proceed with efforts to revive the economy and restore public finances to accomplish Japan’s aim of achieving a primary budget surplus, excluding new bond sales and debt servicing, in the fiscal year that ends in March 2021. Given the massive government bond issuance, Aso said he would strive to sustain fiscal discipline and manage debt as appropriate through close communication with the market. “Achieving economic revival and fiscal consolidation is no easy task,” Aso told parliament as he presented the government’s budget plan for the next fiscal year from April for approval. “We’ll concentrate our efforts to ensure the steps” followed by Abe’s cabinet since he took power in December 2012, Aso said. Japan is exiting the “deflationary slump”, with jobs and household income firmly improving due to record company profits, Aso said, vowing to step up efforts to make a “strong economy”. (AGENCIES)
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