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© 2014 AFPFitch places Japan credit on Rating Watch Negative
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The requested article has expired, and is no longer available. Any related articles, and user comments are shown below.
© 2014 AFP
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Yubaru
Doesn't this fall under the new "State-Secrets" law?
Sensato
This is really a catch-22, in that Japan's national debt is put at risk if the government raises the sales tax, but the debt could potentially worsen even more if the government opts against the hike.
Fitch obviously reckons that a higher tax rate will mean more tax revenue. Still, tax hikes and other austerity measures have made debt problems even worse in many EU countries.
In Japan, a sales tax increase could mean an ongoing vicious circle of increasingly less spending further dampening the economy — which would ironically mean less revenue from a tax hike coupled with a need for higher government expenditures. In my opinion, putting off the tax hike was the right move.
chomskyite
Why doesn't FITCH recommend spending cuts to pork projects and pampered politicians instead?
avigator
Why does it have to be the consumption tax and not corporate or even personal income tax on a prorated basis?
Papi2013
WIth a third world credit rating, how can Japan expect to hold the 2020 Olympics? Shouldn't they be using some of the money to pay down some of the debt incurred by the investors who have invested in Japanese economy?
nigelboy
It's Tokyo that's hosting and not the central government. As to the money, it's sitting there collecting interest unlike the dumb Korean city counterparts.
http://www.metro.tokyo.jp/INET/KEIKAKU/2013/02/70n2d139.htm
fxgai
Sensato,
Raising the tax has put the economy into a technical recession, but as for tax revenues they are actually up, not down, on the prior year, so Fitch has this right.
Consumption tax revenues were almost 1 trillion higher than last year as of the end of October: http://www.mof.go.jp/tax_policy/reference/taxes_and_stamp_revenues/h201410.htm
Still, the government can't reach it's targets by raising tax revenues alone, even the extra projected revenues aren't enough. So I think it's time for the government to show some balls and reduce spending, rather than try to fund more of it through tax revenues rather than borrowing. The crux of the problem is the government is spending well and truely in excess of it's means.
kurisupisu
Went into a local coin dealer today saw that the price of 24k is 5k a gram! The owner said 'it's gone crazy' I have to agree, Abe is turning our money into so much toilet tissue.....
JeffLee
@fxgai
The government expects to collect the highest tax revenues in 7 years this year. But it also credited the booming stock market for that, not just the consumption tax.
And guess what? The stock market was largely fueled by govt and Boj stimulus. BTW the surplus revenues will be used for another fiscal stimulus package. LOL.
John Galt
How much of that "increased tax revenue" was or will be offset by Abe' s countermeasures (you know, the pork barrel projects) and how much will actually go to reducing the budget deficit?
JeffLee
None, it seems. The Japanese media reports I read said the surplus money will be used for more stimulus.
fxgai
John,
The extra 1 trillion yen of consumption tax will contribute in some part to reducing the "budget deficit" (which, when the govt talks about it, ignores 25 trillion yen worth of debt servicing costs), but as Jeff says they are talking about splurging some extra corporate tax revenues they are seeing.
Jeff,
LOL indeed.
I'd suggest that it was the 30% yen devaluation "side-effect" of BOJ QQE that has boosted corporate profits in yen terms, rather than any dopey fiscal "stimulus" package the government put together. If that were such a winner Japan's stock market wouldn't have been a dog for 20 years.