On Monday August 26th a week of hearings regarding the proposed increase in Japan’s sales tax rate commenced. Over the six days of hearings the Government will gather the opinions of various economists, business leaders and consumer advocates regarding the wisdom of a rate increase. The increase is unpopular but viewed by most as necessary to reduce Japan’s public debt, which recently reached 1,000 trillion yen (US$10 trillion).
Last year under a multi-party agreement the Government announced that the sales tax would rise to 8% from 5% next April and to 10% in October 2015 to pay for rising welfare costs in the ageing society. Before the changes can go into effect the Government must certify that the economy is strong enough to withstand the tax hikes.
Prime Minister Abe is expected to make the final decision regarding the increases based on a summary of the debate to be compiled by Economics Minister Akira Amari.