Japan to pledge 2019 tax hike to address debt mountain
Prime Minister Shinzo Abe sees raise – already delayed twice over fears it could derail the fragile economy – as essential to finance snowballing social security expenditure in the rapidly ageing society
The world’s third-largest economy has one of the highest debt-to-GDP ratios among rich nations. Much of it is held domestically at low interest rates, allowing Japan to avoid a Greek-style cash crunch.
Critics say that raising the tax from eight to 10 per cent is crucial to finance snowballing social security expenditure – especially medical fees – in the rapidly ageing society.
The increase – originally planned for October 2015 – has been pushed back twice due to fears it could derail the fragile economy.
Tokyo’s last tax rise in April 2014 was blamed for pushing Japan into a brief recession.