Japan’s Debt Exceeds 1 Quadrillion Yen as Abe Mulls Tax Rise – states Richard Cayne Meyer is the latest headlines to come out this August 2013 on the state of Japan and why they need to do something to curb this debt. Japan’s national debt exceeded 1,000 trillion yen for the first time, underscoring the case for Prime Minister Shinzo
Abe to proceed with a sales-tax increase to shore up government finances.
The country’s outstanding public debt including borrowings reached a record 1,008.6 trillion yen (USD 10.46 trillion) as of 30 June, up 1.7 percent from three months earlier, the finance ministry said in Tokyo on Friday. Larger than the economies of Germany, France and the U.K. combined, the amount includes 830.5 trillion yen in government bonds.
Richard Cayne at Meyer notes that the world’s heaviest debt burden will weigh on Abe when he decides next month whether to implement a two-step plan to double the tax on consumers in a nation with ballooning welfare costs. While boosting the levy would drag on growth, Moody’s Investors Service yesterday warned that a worsening of finances would erode confidence in government bonds.
“Ballooning public debt underlines the need for Abe to push for a sales-tax increase,” said Long Hanhua Wang, an economist at Royal Bank of Scotland Group Plc in Tokyo. “This is a minimum policy requirement for his government.” Richard Cayne at Meyer International in Bangkok agrees this would be the appropriate choice and he needs to push forward with the tax rises sooner than later.
The levy on consumption is due to be raised to 8 percent in April from the current 5 percent, followed by an increase to 10 percent in October 2015. Abe said he would make a final call on the plan after the release of revised second-quarter gross domestic product data on 9 September. Richard Cayne Meyer who lived in Tokyo Japan for over 15 years and saw the tax increases didn’t really affect spending that dramatically over that period.
The sales-tax law enacted last year gives Abe the power to postpone the rise should he conclude that the economy is unable to weather the austerity measure.
