Japanese Prime Minister Shinzo Abe yesterday said an upper house election will take place on July 21 and voiced the possibility of delaying a consumption tax hike scheduled for next year if the economy remains weak.
Abe, in a live interview with national broadcaster NHK, also pledged a “dramatic” tax break in the autumn to encourage investment, calling it the second phase of his broad growth measures.
He stressed that his basic policy was to raise the 5 percent consumption tax to 8 percent next year and then to 10 percent in 2015.
“However, the economy is a living thing. We have to further improve the real economy and put it on a path of robust growth. [The tax hike] must not serve as shackles to that effort,” Abe said, adding that a decision on the hike would be made after a review of economic data in the autumn.
The consumption tax rise was touted last year by then Japanese prime minister Yoshihiko Noda, whose Democratic Party lost in a national election in December last year.
The hike is seen by economists around the world as necessary to contain Tokyo’s expanding national debt, which stands at about twice the size of the world’s third-largest economy.
Abe’s comments come as he prepares for an all-important upper house election, after he has launched a platform of pro-business economic reforms, including aggressive monetary easing and big fiscal spending.
In the NHK interview, he said the election will be on July 21, after the current Diet session ends on June 26.
“I have no plan to extend the Diet session. I want voting to be held on July 21,” he said.
Abe also said he will “issue a dramatic investment tax cut” after the election, calling the measure the “second stage” of his growth strategy.
His Liberal Democratic Party swept the board in the December poll for the powerful lower chamber.
However, with the Japanese House of Councillors still controlled by the opposition, Abe faces a crimp on his legislative agenda.
Still-soaring public approval ratings look set to hand him a handsome victory in the election next month, relieving any potential bottleneck.