"Much will depend on Japan's political leadership and its ability to forge a political consensus on how to offset fiscal measures in the future"
- Standard & Poor's
In an attempt to decrease cumbersome public debt which has reached incredible proportions, Japanese government intends to hike current sales tax twofold within the next four years.
Japan has already borrowed twice the size of its GDP. Due to estimated fall in purchasing power of local investors Japanese government will be either forced to seek funds abroad or to implement unpopular measures, such as sales tax increase, which is likely to be the initial step before more reforms come.
The current plan is to elevate sales tax from 5% up to 8% by April 2014 and then ultimately up to 10% by October 2015. However, some of political parties may oppose this decision during the vote of the parliament.
© Dukascopy Bank