Japan’s Prime Minister Shinzo Abe called a snap election for December and put off a sales tax hike planned for next year, seeking a renewed mandate for his all-or-nothing policies to end two decades of economic stagnation.
Despite those policies, the Japanese economy slipped into a recession last quarter after a sales tax increase in April crushed consumer and business spending. That forced Abe to delay the second hike planned for October next year until April 2017.
Abe said on Tuesday he will dissolve Parliament on Friday. He wants an election as soon as possible, which would be mid-December, to seek public approval for his tax decision and for his overall “Abenomics” policies of extreme monetary easing, heavy Government spending and economic reforms. The Government and the Bank of Japan have pumped hundreds of billions of dollars into the economy in the two years since Abe was elected.
“I realise this election will be tough, but I need to hear the voice of the people,’’ Abe told a news conference. “I will step down if we fail to keep our majority because that would mean our Abenomics is rejected.”
The delay in raising the sales tax to 10 percent from the current 8 percent will slow Japan’s work on repairing its tattered public finances. But Abe said the risk to the world’s third-largest economy was a bigger threat.