Abe okays consumption tax rise from next April

JAPANESE Prime Minister Shinzo Abe yesterday took what many see as the biggest gamble of his political career by giving the go-ahead for a hike in Japan's controversial consumption tax from its current level of 5 per cent to 8 per cent with effect from next April.

He deferred a decision, however, on whether or not to commit his government to further increasing the national sales tax to 10 per cent in October 2015, as provided for in legislation passed last year and designed to help pull government finances out of a threatened downward spiral.

Some view the initial tax hike as a calculated risk given the improved outlook for the Japanese economy - cemented yesterday by a favourable Tankan (business confidence) report from the Bank of Japan (BOJ) - while others say it could dent Mr Abe's popularity among voters by undermining consumption or even derail economic recovery.