Nikkei reports consumption tax hike to be put off – Nomura

By FXStreet Nomura’s Japan Economics Team note that if reports from Nikkei are true on Japan delaying a planned sales tax hike, focus will now be on new date.

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The 14 May edition of the Nikkei reported that Prime Minister Shinzo Abe has decided to postpone the increase in the consumption tax rate to 10% planned for April 2017. The increase had been expected to be postponed as the economy remains in the doldrums. Some had thought that a decision might be made after this summer’s Upper House election.

However, if the report is correct, Mr Abe may have considered it more important for the government to show its commitment to growth before the G7 IseShima summit later this month and before the Upper House election, or may have taken into consideration the need to set a fiscal consolidation target in the Outline of Basic Policies for Economic and Fiscal Management and Reform scheduled for release at the end of this month.

If the increase were to take place in April 2017 as scheduled, we think Japan’s GDP growth could accelerate from the end of this year, largely as a result of an anticipatory surge in consumer spending, and GDP could …read more

Source:: FX Street