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HOME  > Past issues  > 2014 October 1 - 7  > Abe gov’t should abandon its plan to further raise rate of sales tax
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2014 October 1 - 7 [POLITICS]

Abe gov’t should abandon its plan to further raise rate of sales tax

October 1, 2014
Akahata editorial (excerpts)

Personal consumption in Japan has remained sluggish since the consumption tax rate was raised from 5% to 8% in April. The increase in the tax rate, which is imposed on all goods and services, has considerably weakened ordinary people’s purchasing power.

At the same time, Prime Minister Abe Shinzo’s economic policies, dubbed “Abenomics”, have lowered the value of the yen and increased prices for both goods and services, which has led to a decline in workers’ real wages and pension benefits for the elderly.

Even though workers received pay raises after the spring wage offensive, the amount of the increase in wages is far from catching up to the extent of rising prices. In addition, the ratio of regular job offers to job applications has remained low. These developments point to a complete failure of Abenomics.

If the Abe government increases the sales tax rate from the current 8% to 10% in October 2015 as planned, it will again strike a serious blow to personal spending and further harm Japan’s economy.

A survey by the Finance Ministry shows that the increase in added tax revenues from the sales tax hike to 10% amounts to about 14 trillion yen a year. This means that the general public would lose this amount of buying power.

Some ministers of the Abe Cabinet insist that the doubling of the consumption tax rate in two stages is provided for in the law and that a breach of that “promise” would arouse an international mistrust toward Tokyo’s efforts to rebuild its finances. Meanwhile, the Abe government is planning to sharply lower the corporate tax rate. This is obviously a big business-oriented policy. They have no right to claim a need for financial reconstruction.

A public opinion poll conducted by Jiji Press in September indicates that more than three-quarters of the respondents oppose a planned sales tax hike in October next year, while only 20.9% are in favor. All the other recent polls show a similar degree of opposition.

It is absolutely intolerable for the Abe administration to further increase the consumption tax rate in defiance of the overwhelming public opposition.

Past related articles:
> Higher consumption tax sweeps away wage gains [August 2, 2014]
> Personal consumption drops after sales tax is raised to 8% [June 3 & 5, 2014]
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