Japan Press Weekly

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2019 May 8 - 14 [ECONOMY]

Gov’t admission of ‘worsening’ economy adds yet another reason to oppose planned consumption tax hike

Akahata editorial (excerpts)

The Cabinet Office has published the Indexes of Business Conditions for March 2019. It has said that the assessment of the Coincident Index deteriorated to “Worsening” in March from “Signaling a possible turning point” the previous month. The slumps in domestic consumption and exports have pushed the Abe government to admit that the Japanese economy is slowing almost to a standstill.

Under the current economic conditions, the planned consumption tax increase in October is the worst policy imaginable. The government should cancel the tax hike plan without delay.

Prime Minister Abe Shinzo asserted that the economy has been expanding since December 2012 when he took office, calling the situation “the longest economic expansion in postwar Japan”. However, his assertion is most likely an exaggeration as a number of falsifications were found in government economic indicators and statistics last year.

Abe’s claim is out of touch with reality. Since the Abe government increased the consumption tax rate to the current 8% in April 2014, consumers have been reluctant to spend freely. Exports and capital investment, which PM Abe had counted on to spur economic growth, have shown a downward trend pertaining to the slowdown in the Chinese economy and the breakout of a trade war between the U.S. and China. There is no wonder the Cabinet Office’s assessment went down to “Worsening”.

In the monthly labor survey released last week, real wages in March decreased for three straight months on a year-to-year basis. The degree of the decrease was 2.5%, the largest decrease in three years and nine months since June 2015.

It is evident that if the 10% consumption tax rate is implemented in October as planned, it will further discourage people from spending money and will deliver a heavy blow to the economy.

As a growing body of evidence points to an economic downturn, the consumption tax hike would wreak havoc on the economy. The urgent need now is to push the Abe government to abandon the tax hike plan.

Past related articles:
> 150,000 signatures opposing consumption tax hike to 10% submitted to Diet [March 21, 2019]
> Consumption tax hike based on manipulation of statistics should be revoked [January 26, 2019]