Most Japanese firms back planned sales tax hike to fix debt woes

Nakagawa

TWO-THIRDS of Japanese firms support the government's plan to boost the national sales tax in 2017 and almost half believe big hikes in the future will be necessary to combat the country's ballooning debt, a Reuters survey showed.

Sales tax hikes are particularly contentious in Japan, which has seen stagnant growth for two decades. Consumers typically spend big in the months ahead of such tax increases but then tighten purse strings for a long time afterwards.

A sales tax rise in 1997 has been blamed for helping to create a long-lasting deflationary mindset, while last year's increase to 8 per cent from 5 per cent triggered a recession despite coming on the hee…