Abe says he is 'neutral' on whether to raise sales tax to 10%

He certainly wasn't "neutral" on the tax increase earlier this year.

Abe is a Keynesian idiot. Of course he'll raise the tax. He only can tax and spend. Fool!

He's not neutral now either - the decision has already been made to increase the tax to 10%, he's just trying to ease into releasing that information to make it more palatable to the public. But make no mistake, the tax rate WILL go to 10% next year.

Neutral, my heinie. The first tax increase was the cornerstone of his economic policy, and now he's claiming he wouldn't dare touch the issue?! He's covering his butt, is what he's doing. He realizes his popularity is dropping and knows that the electorate is not only still irritated with the first tax increase -- which he backed fully, BTW -- but also newly angered since Abenomics have yet to provide any tangible benefits for any families living just outside the reach of middle class. He's only looking to hedge his bets against potential voter backlash ad this little gem of his is blindingly obvious as such.

"The economy is a living thing and we are thinking about this in a neutral way" : What a load of horse puckey. The central government takes a decidedly non-neutral approach every time it adjusts interest rates and manipulates currency flow. And he's the elected leader of that government. Unless Abe is openly advocating an entirely laissez faire approach to the ecoomy -- which we all know is virtually impossible given how deep in bed major corporations and the government truly are, then he's blowing substanceless smoke.

That the tax increase is going to come is no secret to anyone. That Japan needs the tax increase is also no new revalation. The public understands it needs to do something to help Japan get a hanle on its insane public debt. But to try to free himself of any responsibility for the increase, as if the "living thing" that is the economy somehow willed the tax increase into being of its own volition? Give me a break. As I said, he's the elected leader of Japan. He should have a modicum of intestinal fortitude to act like it and accept responsibility for economic decisions that affect the electorate, either positively or negatively. If he can't do that much, then he needs to find a new line of work.

Yeah, the previous PMs government passes the tax and now the usual suspects on JT are throwing rocks at Abe. We can't let the facts get in our way can we?

The Democratic Party of Japan came to power in the August 2009 elections with a promise not to raise the consumption tax for four years. T[he first DPJ prime minister, Yukio Hatoyama was opposed, but Naoto Kan replaced him and called for the consumption tax to be raised. The following prime minister, Yoshihiko Noda "staked his political life" on raising the tax. Despite an internal battle that saw former DPJ leader and co-founder Ichiro Ozawa and many other DPJ diet members vote against the bill and then leave the party; on June 26, 2012, the lower house of the Japanese diet passed a bill to double the tax to 10%. Despite considerable opposition and an attempted no-confidence motion from minor opposition parties the bill was successfully passed through the upper house on August 10 2012, so the tax was increased to 8% by April 2014 and will be increased to 10% by October 2015

Droll Quarry

Yes, the bill for 10% hike was passed. However the bill included an additional clause 18, Business Clause that the government can review the meaure including tax freeze if the business was not at the aimed at level.

He will certainly pass the increase in th tax. He will do so so that he can spend another 5-10 trillion yen to "stimulate" the economy to counteract any "negative effect" of the tax increase. It's already 100% certain that there will be a negative effect, so Abe is guaranteed to spend these trillions of yen on projects which will favor his friends and political allies.

Politics as usual, politicians spend, and we pay.

What a leader!!!

LDP has been nothing but a total disaster for Japan. NICE GOING.

I think that's the first time I've heard someone proclaim that having no idea what he or she is doing means they are 'neutral'. Guys, he's already decided, but knows the announcement now with the economy OF COURSE going down the crapper contrary to the lofty projections by the government would mean his doom sooner rather than later. And he's not going to reign in government spending! the guy has done nothing but increase it!

Our taxes will go up to 10%, no matter how neutral Abe claims to be.

He's just saying this to cover himself. All government economic data is FAKE. So by saying he's neutral and he needs to wait for the data just means he's going to say it was a "data based decision" so he hopefully won't take any heat.

I get tired of complaining about the failures of Abenomics. However, something has happened that has really teed me off. The public bathhouse where I go to regularly here in Tokyo is closing at the end of this month. One of the reasons it is going out of business: Abenomics. By manipulating the monetary exchange rates to suit Abe's economic goals, the cost of fuel oil (which comes from overseas) for the bathhouse has increased. Moreover, the three percent that was added to the consumption tax has also boosted prices higher on other things related to public bathhouse use. So, the owner said he is no longer making money on the public bathhouse business ... so he is pulling the plug. In addition, the aging bathhouse needs various parts replacements & repairs, and it is just too expensive to do these things, the owner said. And now Abe says he is "neutral" on adding another 2% to the consumption tax, thus raising it to a total of 10%. He'd better pull his head out of the sand and start looking around at what is happening around all his voters. Prices are going up, salaries are still stagnant and the government keeps cutting Social Security payments for the oldsters ... plus, plus, plus ... When asked the other day if he was going to dissolve the Parliament and call for a general election, Abe said something like it is not necessary as everything is okay. If he were to call for an election soon, the only people voting for him would be Soka Gakkai members, who vote as instructed by the New Komeito Party. So, we will undoubtedly have Abe and the LDP for another two years yet ... while the prices continue to go up, up and ... away ...

By manipulating the monetary exchange rates to suit Abe's economic goals, the cost of fuel oil (which comes from overseas) for the bathhouse has increased. Moreover, the three percent that was added to the consumption tax has also boosted prices higher on other things related to public bathhouse use. So, the owner said he is no longer making money on the public bathhouse business ... so he is pulling the plug. In addition, the aging bathhouse needs various parts replacements & repairs, and it is just too expensive to do these things, the owner said. And now Abe says he is "neutral" on adding another 2% to the consumption tax, thus raising it to a total of 10%. He'd better pull his head out of the sand and start looking around at what is happening around all his voters. Prices are going up, salaries are still stagnant and the government keeps cutting Social Security payments for the oldsters ... plus, plus, plus ... When asked the other day if he was going to dissolve the Parliament and call for a general election, Abe said something like it is not necessary as everything is okay. If he were to call for an election soon, the only people voting for him would be Soka Gakkai members, who vote as instructed by the New Komeito Party. So, we will undoubtedly have Abe and the LDP for another two years yet ... while the prices continue to go up, up and ... away ...

No offense but this guy should of go out of business simply on stupidity alone.

nigelboy

Prices are going up, salaries are still stagnant and the government keeps cutting Social Security payments for the oldsters

LOL, weren't you the one who was praising Abenomics just earlier?

@nigelboy ... By manipulating the monetary exchange rates to suit Abe's economic goals, the cost of fuel oil (which comes from overseas) for the bathhouse has increased.

Many of the sentou use scrap wood from demolished houses. In the Ota-ku area some buy waste jet engine oil from Haneda airport facilities (by regulation jet engine oil has to be replaced frequently, so there is a lot of waste oil). All on the dark side of course.

Like the article notes, Japan's economy contracted by 7.1% in the April to June quarter (on an annual basis). I think Abe is having second thoughts about raising the sales tax further, after seeing the devastation from the first round of hikes.

Obviously, though, he can't admit that the tax increase was a mistake, so instead he is taking a "neutral" stance regarding round two of the hike.

For Abe, his hamlet moment will keep follow him, likely waking him up at the mid of night, and asking himself “To be(raise tax), or not to be, that is the question”.

Personally I think Abe may act like a school boy to procrastinate to do the homework, yet the options available on the table are not favorable either given the crashing public debts and ever-growing social services expenditures in Japan.

nigelboy, are you mocking someone else or you finally are able to see facts from hubris. :)

edojin Public bath house is on the verge of extinction even before Abenomics.

Abe says he is 'neutral' LMFAO yeah well wait until the next quarter figures have been manipulated enough to break the bad news, hes just trying to limit the damage to his support rate before the next election comes around. delay in the next hike will only happen when the earth reverses its rotation.

@ enough, ethan and others who can't read

Clearly nigelboy messed up his quote. Anyone can see that his contribution was this sentence alone

No offense but this guy should of go out of business simply on stupidity alone.

The rest of it is verbatim what edojin posted.

As for the sales tax ... look around people. I challenge anyone to find a first world economy with lower sales taxes than Japan. And don't give me weepy excuses about exemptions for carrots and broccoli. Taxes in japan are among the lowest in the free world. Its indisputable.

I recently returned to my home country on vacation (after a seven year absence). I was shocked to see how high the prices were on everything. I mean I couldn't find anything (except food in the grocery store) that was even close to as cheap as it is in Japan. The opposite was the case several decades ago when I first came here. So for the last twenty five years prices in Japan have remained fairly stagnant while they have gone (to use edo's phrase) "up, up and ...away" in other first world countries.

I get that people want to pay as little tax as possible. So do I. But let's be realistic. The sales tax in japan needs to be brought into line with taxes in other first world economies.

That said, I believe Abe will hold off on raising the tax. Not because its the right thing to do, but because he wants to win another term and knows that his political future is uncertain if he raises the tax again and angers all the poor people.

enough, ethan and others who can't read

Thanks hindingout. Messed up on the quotes.

marcelito,

hidingout - there are two crucial points you left out in your comparison. Firstly, in a number of countries ( including mine ) when sales tax goes up , other taxes get cut to compensate the working population ..

That's seemingly a matter of the government trying to alter how it gathers tax revenue, rather than adjust how much it takes.

The good thing about consumption taxes is that they provide more stable revenue sources than do things like income tax, which fluctuate together with economic conditions.

But in Japan's case, it's spending almost twice as much as it takes in tax revenue, and in the absence of massive cuts to social security type programs which make up circa 70% of total expenditure, it has to raise tax revenues to pay for what it is spending.

Overall, I personally suspect my tax burden is lower in Japan than it might be elsewhere. It's not that I want to pay higher tax in Japan. I'd rather spending was cut to balance the budget. But my biggest fear is that the government's finances collapse, which would really cause a massive mess. Given the choice I'd still rather pay higher consumption tax. Not like I am a voter though, I'm just a hoper.

Secondly, the average salaries and conditions in developed western countries are higher nowadays than in Japan to account for the higher sales taxes...yes, in Japan prices have stayed the same for twenty years, so have the salaries ( or in many cases they decreased ). In our countries taxes went up and so did the wages.

Inflation has also been running at 2-3% annually in most places though, I think that has something to do with higher salaries overseas.

LDP said that they were against the tax raise, and now they're raising it, of course.

I don't know how even the hardcore Abe supporter are going to justify this.

Hidingout

As for the sales tax ... look around people. I challenge anyone to find a first world economy with lower sales taxes than Japan. And don't give me weepy excuses about exemptions for carrots and broccoli. Taxes in japan are among the lowest in the free world. Its indisputable.

"I challenge anyone to find a first world economy with lower sales taxes than Japan." - LMAO. Nice joke, hahahaha. Japan has some of the HIGHEST taxes in the world. I see that you have bought the propaganda by the Japanese government that Japan's tax is "technically low" (i.e. on paper). I'm sure that it won't work on the regular people who can hardly get by with their current earning and high tax.

The fact is, the Japanese consumers indirectly pay for the price that the corporations pay, such as debts from unlimited borrowing from a bank, and inefficient practices and overproduction. Japan's housing and apartments are some of the tiniest, most cramped in the world, because the land price is so ridiculously high, because they are reserved for corporations. Big corporations pay next to nothing for everything, while the consumers have to pay extra for the burden. Pork-barreling policies allow the Japan Agricultural Association to maintain the status quo, making its practice inefficient and hence jacking up the price of fruits and vegetables.

Trillions of yen are being wasted on pointless public construction work projects that nobody ever uses. Wages haven't gone up like Abenomics had promised. Still support Abe? LOL...

The fact is, the middle class in Japan should be getting angry, and it's about time. Japan needs a political party that represents the middle class, not LDP, not Abe, who are pro-corporation.

I recently returned to my home country on vacation (after a seven year absence). I was shocked to see how high the prices were on everything. I mean I couldn't find anything (except food in the grocery store) that was even close to as cheap as it is in Japan.

Uh huh, and where is your home country? You can go to Europe, and buy the same kind of foods on a grocery store, for the half price and far better, fresher quality.

@enough_rope,Uh huh, and where is your home country

That is fairly straight question, and I hope that he can honestly answer this simple question without citing highly classified national security clearance.

Joke aside, comments given by you, marcelito and fxgai make tons of senses in Japan’s case. In addition, I would like to point out that Japan’s consumption tax hike was originated as the bitter medicine to combat years of deflation and run-away spending train. At this juncture, BOJ’s aggressive money easing policy and Abe’s ‘magic two Arrows’ have not turned the tide as recent Japan’s economic data have been suggested. Hopefully, the long-waited structure reforms may bring fresh air into Japan’s stagnated economy. and revitalize Japan.

Good points marcelito,

enough_rope,

There is waste in public construction etc, but you could cut the complete budget of the Ministry of Land, Infrastructure, Transport and Tourism (6 trillion yen) and Japan would still be running a massive budget deficit, and it's useful roads would have fallen into disrepair too.

Looking at the budget deficit from another angle, the social security payments plus debt servicing costs alone eat up the whole budget.

Therefore it follows that cutting waste alone isn't going to cut the mustard. The government ought to cut waste, yes, but the budget deficit exists because the government spends more than it can afford, even on good stuff. If it doesn't cut spending (including on stuff that people find useful) its alternative is to raise taxes so that the public pay for their demands.

It's no bed of roses either way. People will either lose useful public services, or they will pay more tax. A bit of economic growth would help too, but I for one think growth that would double tax revenues is improbable in Japan.

The fact is, the middle class in Japan should be getting angry, and it's about time. Japan needs a political party that represents the middle class, not LDP, not Abe, who are pro-corporation.

A pro-reform party is necessary, but pro-corporation is pro-people. (Crony capitalism is a wrong way to pursue this though.) The best way to help people, is to improve the job market (higher demand for labour means higher wages), and that can be done by boosting economic activity. Policies that are good for business are how that can be achieved. Abe did have the right idea with his 3rd arrow, but his bow seems to have broken before he managed to fire the thing.

"I challenge anyone to find a first world economy with lower sales taxes than Japan." - LMAO. Nice joke, hahahaha. Japan has some of the HIGHEST taxes in the world. I see that you have bought the propaganda by the Japanese government that Japan's tax is "technically low" (i.e. on paper). I'm sure that it won't work on the regular people who can hardly get by with their current earning and high tax.

The fact is, the Japanese consumers indirectly pay for the price that the corporations pay, such as debts from unlimited borrowing from a bank, and inefficient practices and overproduction. Japan's housing and apartments are some of the tiniest, most cramped in the world, because the land price is so ridiculously high, because they are reserved for corporations. Big corporations pay next to nothing for everything, while the consumers have to pay extra for the burden. Pork-barreling policies allow the Japan Agricultural Association to maintain the status quo, making its practice inefficient and hence jacking up the price of fruits and vegetables.

Trillions of yen are being wasted on pointless public construction work projects that nobody ever uses. Wages haven't gone up like Abenomics had promised. Still support Abe? LOL...

Blah blah blah .... still having problems with reading comprehension I see. Here is what I said;

I challenge anyone to find a first world economy with lower sales taxes than Japan.

I didn't mention anything about corporate tax, land prices or pork barrel projects. So as soon as you can find a first world economy with lower sales tax than Japan I will entertain the rest of the o/t nonsense that you posted.

That is fairly straight question, and I hope that he can honestly answer this simple question without citing highly classified national security clearance.

Mind your own business vanker.

Secondly, the average salaries and conditions in developed western countries are higher nowadays than in Japan to account for the higher sales taxes

Its a valid point marcelito. No doubt wages in Japan need to come up. This doesn't negate the fact that Japan still has some of the lowest sales taxes in the free world.

Overall, I personally suspect my tax burden is lower in Japan than it might be elsewhere. It's not that I want to pay higher tax in Japan. I'd rather spending was cut to balance the budget. But my biggest fear is that the government's finances collapse, which would really cause a massive mess. Given the choice I'd still rather pay higher consumption tax. Not like I am a voter though, I'm just a hoper.

Thanks for that fxgai. This is my view of the situation as well.

"I would like to point out that Japan’s consumption tax hike was originated as the bitter medicine to combat years of deflation and run-away spending train"

And has this bitter medicine worked to improve the Japanese government's finances? No!

Liar liar pants on fire