Japan's Abe Announces Tax Hike Delay, General Election

Tokyo, Nov. 18 (Jiji Press)--Japanese Prime Minister Shinzo Abe said Tuesday that he has decided to put off a planned hike of the consumption tax rate to 10 pct by 18 months until April 2017 and will call a general election to gauge public support for the decision. Abe said at a news conference in the evening that he will dissolve the House of Representatives, the all-important lower chamber of the Diet, or Japan's parliament, on Friday for a snap election. The election is expected to be held on Dec. 14. The tax hike will be delayed because the Abe administration puts priority on keeping the Japanese economy afloat and ending decades-old deflation in the country, according to Abe. The prime minister said, however, that the tax hike will not be put off again. Japan's real gross domestic product fell at an annual rate of 1.6 pct in July-September after tumbling 7.3 pct in April-June, the government reported Monday. Abe said at Tuesday's news conference that the Japanese economy has yet to be back on a growth path, underlining the need to postpone the tax hike. Abe said his government will implement a powerful economic package by compiling a supplementary budget for fiscal 2014. As the Japanese economy is struggling to overcome the negative effects of April's consumption tax rate hike from 5 pct to 8 pct, Abe's reflationary policy, dubbed Abenomics, is expected to be the biggest issue in the upcoming election. Japan should not miss an opportunity to get out of deflation, Abe said, seeking public support for the continuation of Abenomics. He said his government will submit legislation for the tax hike postponement and the supplementary budget during an ordinary Diet session starting in January. Opposition parties are poised to step up their argument that the tax hike postponement means that Abenomics is failing. The ruling coalition of the Liberal Democratic Party and Komeito hopes to maintain its two-third Lower House majority, which the two parties won in the last election for the chamber in December 2012. Abe said he would step down if the ruling bloc fails to keep its majority in the Lower House. END