Japan
increased its sales tax, also known as consumption tax, from 5% to
8% from 1 April, the first hike in 17 years. The rise stimulated
consumers to make a large amount of purchase before the sales tax
hike.
Japan
has been suffering deflation for more than two decades, which
not only hurts its domestic economy but also makes the whole
country stuck. Deflation makes consumers and businesses incline to put off their purchases because they think they can get lower prices in the future. Many people think this rise in tax will help Japan achieve
its 2% inflation target.
Sounds like Japan needs to implement expansionary monetary / fiscal policies... Pump more money into the system get inflation going.
ReplyDeleteI am disagree with increasing consumption tax. After Japan was suffer from long deflation,the central bank use fisical expansion to cause inflation. Now, increasing money supply generally cause the inflation. However, the policy incresing the consumption tax affect C, meaning the consumption will be decrease. I think it cause deflation. at least, Japane had to wait until the inflation is 1 or 2%.
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ReplyDeleteNo citizen wants to pay taxes and increasing that tax higher will just make consumers buy their products from online and have it shipped rather than paying that extra money to have the product at the exact moment.
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