Japan firms overwhelmingly want Abe to delay tax hike

FE Team | Published: November 14, 2014 00:00:00 | Updated: November 30, 2026 06:01:00

TOKYO, Nov 13 (Reuters): Japanese companies overwhelmingly want Prime Minister Shinzo Abe to delay or scrap a planned tax increase, a Reuters poll shows, highlighting concerns that it could derail a fragile economic recovery.
As expectations grow that Abe will soon announce he is putting off the unpopular measure, the Reuters Corporate Survey found that nearly three in four big companies think the economy is too weak to weather the increase as scheduled in October 2015. The government raised the national sales tax to 8.0 per cent from 5.0 per cent in April, the first of a two-stage plan that would raise it to 10 per cent next October in a bid to rein in massive public debt.
The April hike pushed Japan into its worst decline since the global financial crisis in the second quarter. Abe has said he will look at third quarter GDP, due out Monday, before deciding whether to proceed with the planned October 2015 tax increase.
Some Japanese media say Abe will postpone the hike and call a general election in an effort to lock in his grip on power. The economy likely grew at an annualized 2.1 per cent rate in the third quarter, a relatively feeble rebound the from the 7.1 per cent April-June plunge, a Reuters poll of economists showed last week.
"It's highly risky to force through a tax hike in a situation where consumption has not recovered as expected," said a manufacturing executive in the Reuters survey. "It's desirable to delay it."