Japan’s planned consumption tax rise to 10% still a doubt

Wed 19th Feb 2014

The second leg of the Japan’s Consumption Tax rise to 10% in 2015 remains conditional on the economy continuing its rebound the government confirmed this week.

Consumption Tax increase in two stages

The proposed two-stage increase of Consumption Tax from the current 5% to 10% by 2015 was first muted in 2012.  It has been prompted by one of the fast ageing populations in the world and pressure of heath care costs.  Japan’s total debt now stands at 200% to GDP, the largest in the developed world.

The first rise, to 8%, is scheduled for 1 April 2014.  This will be followed by the second rise to 10% in October 2015.  Both rises were made conditional upon the recovery of the Japanese economy.

Since the launch of the government’s ‘Abenomics’ boost, there has been a significant upturn in the economic performance of Japan.  GDP growth has hit 4% after almost twenty years of stagnation.  The government also provided for over Yen4 trillion worth of capital spend to help offset the short term affects of the first rise this year.

The government expects to make is final decision on the second Consumption Tax rise at the end of 2014.

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