May 28, 2010

  • A d v e r t i s e m e n t
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Japan should start fiscal consolidation next year, including gradually raising the country’s sales tax, taking advantage of solid growth now, the IMF said on Wednesday.

The recommendation by the International Monetary Fund contradicts Prime Minister Yukio Hatoyama’s pledge not to raise the sales tax rate at least until the next lower house election, which does not need to be held until 2013.

“With global scrutiny of public finances increasing, the need for early and credible fiscal adjustment has become critical,” the IMF said after its annual review of Japan’s economy and economic policies.

“In our view, fiscal adjustment should start in 2011/12, beginning with a gradual increase in the consumption tax, to take advantage of cyclical recovery,” the IMF said.

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