TOKYO – For months, Japanese Prime Minister Shinzo Abe said he would go ahead with a planned sales tax hike next year, even as rumours swirled that he was having second thoughts with parliamentary elections looming.
Sure enough, Abe announced Wednesday that he has decided to further delay the planned sales tax increase in April 2017, to 10 per cent from 8 per cent, until 2019. The last time Japan raised its sales tax, to 8 per cent from 5 per cent in April 2014, the economy sank into recession.
Here is a look at how Abe’s comments on the sales tax have evolved:
Nov. 18, 2014, when he announced that a planned increase on October 2015 would be put back to April 2017:
“There are some who say that we will postpone the planned October 2015 increase by 18 months, and then 18 months later, we will postpone it again. Here, I declare unambiguously to you that there will be no further postponements.”
Jan. 6, 2016, at a Lower House plenary session:
“I will achieve (the tax hike) without fail, unless there is a severe situation such as the Lehman shock or another massive earthquake. We need to fulfil our responsibility to hand over Japan’s world-renowned social welfare system to the next generation, and maintain trust from financial markets and international society.”
March 14, 2016, at the Upper House budget committee:
“As in the latest G-20 statement, there is a recognition that recent market movements do not reflect the underlying world economic fundamentals. … Of course, we should avoid any step that would endanger the Japanese economy.”
March 25, 2016, at the Upper House budget committee:
“Events like the Lehman shock and a disaster like a major earthquake could happen at any moment, and no matter when that happens, we must protect the people, the economy and employment. In order to do so, we must not make a mistake in our economic policy.”
May 27, 2016, at the Group of Seven summit closing news conference:
“Global economic growth last year fell to its lowest since the Lehman shock, and forecasts for this year have been lowered. … The global economy is at risk of falling into a crisis beyond the ordinary business cycle if we take the wrong step. … I will think about what to do with the consumption tax, but at this juncture I have not reached a conclusion.”
May 28, 2016
Japanese media report that Abe met with senior ruling party officials to express his intention to delay the sales tax hike to October 2019.
June 1, 2016, at a news conference announcing the postponement:
“I have decided that the consumption tax increase, which could pose a risk of hurting domestic demand, needs to be postponed. … We must be prepared for risks, and we must acknowledge the risks accurately and take appropriate measures to avoid having them become a crisis.”
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