May 17, 2019

The Cabinet Office on May 13 announced that the latest diffusion index of business indicators shows that the economy is "worsening" for the first time in a period of six years and two months.

Warning that any tax hike amid an economic downturn would devastate the country's overall economy, Japanese Communist Party Chair Shii Kazuo demanded that the planned increase in the consumption tax rate to 10% in October in Japan be abandoned.

On May 16 at a press conference in the Diet building, JCP Chair Shii said, "Our party has repeatedly stated in the Diet, 'Given the struggling household economy and stagnant real wages, obviously the economy is deteriorating'." Shii criticized the Abe government for continuing to claim, "Japan's economy is getting better," and for forcing through this fiscal year's budget premised on the consumption tax increase to 10%.

Shii said, "Prime Minister Abe, by denying a sad state of the economy, bulldozed through the FY2019 budget. The political responsibility he bears is extremely serious in this regard."

When the consumption tax was first introduced in 1989 and when additional increases in the tax rate took place in 1997 and 2014, the economy was "in an expansionary phase", was showing a "strong recovery" or "on a mild recovery", according to the then monthly economic reports.

Shii said, "Despite such upward trends, the initial tax rate of 3%, then the increase to 5%, and another increase to 8% triggered economic deterioration each time."

He added, "The consumption tax rate has never been raised in a situation where the government itself admitted to an ailing economy. The October tax hike in the middle of a stagnant economy will be reckless conduct amounting to an act of self-destruction."