Prime Minister Shinzo Abe said Oct. 15 the government will raise the consumption tax to 10 percent from the current 8 percent in October 2019 to help finance ballooning social security costs.
Chief Cabinet Secretary Yoshihide Suga said Abe instructed relevant ministers to come up with measures to mitigate the negative impact of the tax hike. The increase was originally scheduled for October 2015 but was postponed twice due to concerns that it would dampen consumer spending and hurt the economy.
The last time the consumption tax was raised – to 8 percent from 5 percent in 2014 – Japan went through a brief recession, but the government sees another hike as crucial to pay for growing medical and nursing care costs due to the graying population.
Abe made the announcement during an extraordinary Cabinet meeting where a supplementary budget of ¥940 billion for fiscal 2018 was approved, partly to promote reconstruction in areas hit by torrential rains, earthquakes and typhoons this year. (Kyodo)