October 16, 2012

The Third Rail of Japanese Politics

Takamitsu Sawa, Japan Times

AP Photo

Looking back over the past two decades, non-LDP administrations suffered severe setbacks every time they proposed consumption tax hikes — Hosokawa, Kan, and now likely Noda. Nobody would argue against the need for restoring the nation's fiscal health. European experiences clearly suggest that the easiest way to secure revenue increase is to raise the consumption tax rate. Why is it then that the Japanese voters react so negatively to higher consumption tax that their revolt often proves fatal to governments?

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TAGGED: Consumption Tax, Japan

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