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Japan’s Abe to Delay Sales Tax Hike until 2019: Government Source | ASHARQ AL-AWSAT English Archive 2005 -2017
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Japanese Prime Minister Shinzo Abe speaks at a news conference during the G7 Ise-Shima Summit in Shima, Japan, May 27, 2016. REUTERS/Issei Kato


Japanese Prime Minister Shinzo Abe intends to holdback an increase in sales tax by two and a half years, a government official said on Sunday, as the economy sputters and Abe gets ready for a national election.

Abe revealed to Finance Minister Taro Aso and the secretary general of his ruling Liberal Democratic Party, Sadakazu Tanigaki, of his plan to suggest delaying the tax hike for a second time, until October 2019, said the official, who was handled a summary on the meeting.

Moreover, the prime minister is expected to order an extra budget to fund stimulus measures, just two months into the fiscal year.

Abe said Japan would mobilize “all policy tools” – including the possibility of delaying the tax hike – after chairing a summit of Group of Seven leaders on Friday.

“There is a risk of the global economy falling into crisis if appropriate policy responses are not made,” Abe told a news conference after the summit. Noting that Abe has always said he would keep with a plan to raise the tax rate to 10 percent from 8 percent next April, if Japan did not face a crisis on the magnitude of the Lehman shock.

He also added that the G7 “shares a strong sense of crisis” about the global outlook, with the most worrisome risk being a global contraction led by a slowdown in emerging economies like China.

On the other hand, despite massive monetary easing by the Bank of Japan and a series of government spending packages, Japan’s growth is weakening. Core consumer prices and exports fell in April, and manufacturing shrank at the fastest pace since Abe took office in 2012.