Opinions were mixed on the second day of a government hearing on Japan's two-stage sales tax hike plan as Prime Minister Shinzo Abe and his administration ask experts for their views on how to balance economic growth and fiscal rehabilitation.
Nine experts took part in the second session on Tuesday, including Yale University Prof. Koichi Hamada, a special adviser to Mr. Abe, as well as Tokyo University Prof. Takatoshi Ito, Credit Suisse Chief Japan Economist Hiromichi Shirakawa and Mitsumaru Kumagai, chief economist at the Daiwa Research Institute.
Economy minister Akira Amari, who briefed reporters after the meeting, said five participants indicated that the government should go ahead with the current plan, while four others suggested alternatives to avoid the negative impact the tax hike might have on the economy.
"Those who were in favor of the current plan cited the importance of maintaining confidence in the nation's finances, the necessity of avoiding market risks from not implementing the tax hikes, securing social security resources and investing in the future," he said.
Mr. Hamada suggested Tokyo should delay the two-stage tax hike by one year, or possibly take an incremental approach of an annual 1 percentage point increase starting next year. But Mr. Amari also said Mr. Hamada voiced support in the idea of cutting the corporate tax rate to cover the negative impact a sales tax hike may have on the economy. Mr. Amari added that he himself believed tax breaks had the effect of improving corporations' growth potential in the face of a slumping economy.
Source: NewsOnJapan
