Japan is currently facing an enormous national debt, due to which Japanese Prime Minister Shinzo Abe announced on Tuesday, October 1, 2013 that the sales tax will be increased in the country. The Prime Minster stated that the increase in sales tax is an important step for the country, however, critics are expressing their concerns over the fact that the latest move would put the country's economic recovery on hold.

sales tax

Abe's latest decision is bound to be a significant political gamble for him, as earlier hikes – similar to this one – have proved to be the end of previous prime ministers' careers. Abe is scheduled to hold a televised press conference on October 1, 2013, at 6 pm and will announce the details of a package which has a goal to reduce the burden placed on the government.

The news of tax hike has ended a period of uncertainty whether Abe would proceed with hiking the levy to 8.0% from 5%. However, the suggested increase is still much lower than in other wealthy countries. Economists state that the recent hike is likely to affect household budgets by 8 trillion yen. The package proposed by Abe is expected to have benefits for low-income earners and corporate incentives, in order to increase investments and salaries.

The Prime Minister might also try to get rid of a special corporate tax, which was brought after the 2011 quake and tsunami disaster.

Photo Credits: World News Curator