Battling Perception and Reality in Japan

Japanese Prime Minister Shinzo Abe has a plan to get Japan's economy back on track, but it comes with a steep price many lawmakers and citizens are unwilling to pay. On April 18, Abe reiterated his intention to hike up consumption taxes in April 2017 in an effort to reduce Japan's massive public debt and fund rising social security costs. But the political battle ahead of him is one he may not be able win. Calls from politicians and the public alike to postpone the rate increase so as not to burden the country's stagnant economy and exacerbate political discord are getting louder. These fears are not unfounded; given Japan's recent economic activity, weak forecasts and experience with the consequences of tax hikes, the prospects of a tax-based solution to the country's economic woes look bleak. Coupled with growing disillusionment with Abe's economic policies as a whole, the opposition to his latest proposal will probably force the prime minister to announce a delay of the tax increase before upper house elections this summer.