Japan’s JiJi Press reports that the ruling DPJ will propose a two-step hike in the national consumption tax to 10% from the present 5% by 2015.
Hiking the sales tax in the late 90s helped snuff out the modest recovery then underway, leading to a second decade of slow-to-nonexistent growth.
While Japan has a yawning budget deficit, much of the spending has been concentrated in unproductive public works, so-called bridges to nowhere which lined the pockets of contractors but did little to boost the broader economy. Lately, the spending has come as a response the earthquake and resulting tsunami…
The 1990s tax hike saw the economy lapse back into recession and the JPY resume its rise as it so often does during times of Japanese economic weakness.
