Japan | Abe puts off tax hike, calls snap poll

A man looks at electronic stock indicator in Tokyo

Japan’s Prime Minister Shinzo Abe called a snap election for December and put off a sales tax hike planned for next year until 2017 as the country struggles to fend off recession.
Abe said yesterday that he decided to postpone a second tax hike after Japan, the world’s third-largest economy, slumped into recession due to a tax increase in April. Abe said he will dissolve parliament on Friday. The election is scheduled for mid-December.
Delaying the tax hike will slow Japan’s work on repairing its tattered public finances. But Abe said the risk to the economy was a bigger threat.
Fresh elections may seem a puzzling decision given the bad news on the economy. But the Liberal Democrats have a solid majority and hope to further consolidate their power at a time when opposition parties are weak and in disarray.
The general election will seek a renewed public mandate for Abe’s all-or-nothing bid to revive Japan’s economy, which has suffered from deflation and stagnation for two decades. After taking office two years ago, Abe declared “Japan is Back” and vowed to restore his country’s fading economic might.
Japan needs more tax hikes to get its swollen government debt under control, but the April tax increase, to 8 percent from 5 percent, crushed consumer and business spending.
As early as last week, the Liberal Democrats were coaching freshman lawmakers on campaign strategies and opposition parties rushed to discuss possible new alliances. Pre-election debates by party leaders are in the works, and new campaign posters have gone up in Tokyo neighborhoods.
Abe got a rare second term as prime minister, having stepped down just a year into his rocky first term in office in 2006-2007. His support ratings started out high, as share prices surged in early 2013. But they have fallen recently. Parliament got bogged down in squabbles over campaign finance scandals that led to resignations of two of his cabinet ministers within weeks of an early September reshuffle. Elaine Kurtenbach , Business Writer, Tokyo, AP