Prime Minister Shinzo announce on today, Oct. 15, the rise in consumption tax rate by October of 2019.
It is expected for Prime Minister Shinzo Abe to announce the rise in consumption tax rate from 8% to 10% for October 2019, which is seen as necessary to pay the free education and other social security initiatives.
Free education is absolutely necessary if Japan wishes to break its current birth rate numbers, and all the while would set Japan on a strong foundation.
This announcement has been delayed twice as concerns over the impact on Japan’s economy increased, and fears of repeating the financial crisis of 2008 are getting more apparent with Japan’s current situation. The consumption tax rate has been increased before oin2014, from 5% to 8%, and many attributed the recession in Q2 2014 to be the effect of the cause.
And after reconsidering the pros and cons over the years, part two of the consumption tax hike can now commence.
Japan has been in debt for a while already, and this increase in taxes is one way to remedy its fiscal crisis, albeit slowly.
Meanwhile, the announcement is due at the cabinet of Japan and it is expected to approve a total budget of 940 billion yen ($8.4 billion) for the use in assisting areas recently hit by natural disasters and help with the reconstruction of destroyed urban areas.
The PM said he will also reform the country’s social security system, focusing on pension and national health insurance, among others.
The tax hike should according to the International Monetary Fund be increased gradually up to 15% to help pay the cost for the aging population while paying its massive debt at the same time.