The logic behind the tax increase is that the government needs more money to provide pensions and health care for the growing legions of elderly like Mitsui, while reining in the developed world’s largest government debt pile.
A tax increase risks sapping the economy and undoing progress toward reflation, they argue
The Abe administration had tried to learn as much as it could from 2014, when a slightly larger increase in the tax helped snuff out the initial momentum of Abenomics. A higher sales tax then hadn’t meshed well with the goal of sparking higher prices, higher wages, higher consumption and higher growth.
In a country where the working age population is set to shrink by more than a third between 2015 and 2060, there is a clear need for more revenue to pay for medical, pension, welfare and elderly care bills that have already been rising at a steady clip for decades.
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