Japan Press Weekly

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2016 May 18 - 24 [POLITICS]

Shii demands cancellation of tax hike plan, citing decline in both wages and consumer spending

Japanese Communist Party Chair Shii Kazuo in a one-on-one debate on May 18 pressed Prime Minister Abe Shinzo to cancel the plan to increase the consumption tax rate in April next year to 10%, pointing out that personal consumption has been decelerating since the government raised the rate to the current 8% two years ago.

Abe in response said, “The rate will be increased as scheduled unless serious crisis situations like the Lehman shock or a massive disaster arise.”

Shii said that compared to the October-December quarter of fiscal 2013 before the tax rate rose from 5% to 8%, real consumer spending in the January-March quarter of fiscal 2015 fell by eight trillion yen at an annualized amount.

Pointing out that individual consumption which accounts for 60% of Japan’s GDP has remained stagnant, he asked the prime minister what he thinks makes the situation so bad.

Abe admitted that the consumption tax increase is one of the reasons for the drop in personal spending by answering, “Deflation has been hitting our country for about 20 years. I hammered out the new economic policy against deflation. Then, the sales tax hike came up half way through this effort, causing the lingering slowdown in spending.” He, however, showed no remorse for the negative effects of the higher tax and his economic policy called Abenomics.

Wages of workers have also been on the decrease for four consecutive years in addition to the decrease in consumer spending. Shii again asked, “The tax hike will certainly further aggravate the Japanese economy. Do you still intend to press ahead with the plan?”

Abe said, “I cannot simply answer ‘Yes’ or ‘No’.” He did not deny the possibility of a forcible implementation of the tax hike.

Shii proposed that in order to secure financial resources needed to buoy consumers, the government undertake tax reform to increase taxes on the rich and large corporations so they shoulder a fair share of tax burdens.

Past related articles:
> Steep rise in Engel’s coefficient indicates quality of living crisis [April 15, 2016]
> Abe should acknowledge failure of ‘Abenomics’ and cancel consumption tax hike plan [March 25, 2016]
> Gov’t data provides evidence of failure of ‘Abenomics’ [February 17 & 18, 2016]
> Abenomics brings about zero GDP growth [February 17, 2015]