Monday, August 3, 2015   

8pc sales tax may weigh on Japan's economy
(04-01 12:53)

Japan raised its sales tax, moving to stabilize government finances but at the risk of undermining a shaky economic recovery.
It's a gamble the economy cannot afford to take, given its soaring public debt.
Economists expect the sales tax rise, to 8 percent from 5 percent, to slow but not derail the recovery. It is the first such increase since 1997, when the combination of the tax rise, an unwinding of debt from Japan's bubble economy days and the impact of a regional financial crisis plunged the country into recession.
But recent data suggest the recovery may be less solid than Prime Minister Shinzo Abe had hoped for when he agreed to raise the tax last fall.
“Japan's consumers continue to face severe headwinds as strong employment gains remain insufficient to compensate for falling real wages,'' Marcel Thieliant of Capital Economics said in a report Tuesday.
While some better-off Japanese have splashed out on luxury goods and vehicles, most consumers remain wary.
Housewife Kyoko Takahashi, 77, doing her daily shopping in the vegetable section of a supermarket in Urayasu, a Tokyo suburb, believes buying ahead wouldn't result in much of a saving overall.
“Besides, I could end up buying something which I don't need,'' she said. –AP

   
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