Japan sales tax hike: ruling parties go for US$8b exemption

Tokyo

JAPAN's ruling coalition on Wednesday endorsed an US$8 billion exemption in a planned sales tax hike, a move widely seen as a bid to lure voters in upper house polls next year - a worrying signal of back-pedalling on fiscal consolidation.

In the annual tax reform, Prime Minister Shinzo Abe's Liberal Democratic Party (LDP) and small ally the Komeito party agreed to keep the sales tax on food at the current 8 per cent when the nationwide sales tax rises to 10 per cent in April 2017.

It would be the first time that Japan is adopting a lower tax rates on food - similar to multiple value-added tax rates in Europe - since the sales tax was introduc…