A
regressive sales tax by any other name is still regressive.
In
effect it takes money out of job creating consumers pockets.
From
the New
Repubic
http://www.newrepublic.com/article/120305/japans-economy-recession-because-premature-tax-hike
…..........before
the Bank of Japan had a chance to prove its credibility, Japanese
policymakers made a critical policy mistake: They increased the
consumption tax—a value-added tax (VAT) as it is officially
called—from 5 percent to 8 percent, the first increase since 1997.
If your goal is to get consumers spending money again, it’s easy to
see why raising taxes on them is such bad policy. It gives them less
money to spend. The effects of the taxwere
felt immediately after
it took effect on April 1. In the second quarter of the year—from
April 1 to June 30—the economy contracted at an annualized rate of
7.3 percent. “The hope was that all the other stimulus they were
providing would offset and wash out the impact of the VAT,” Zandi
said. “That hope is not coming to fruition. They made a big mistake
with that. They did a similar thing back in the late 1990s. It worked
out just as badly, if not worse.”
In
October 2015, the VAT is scheduled to rise once again. Economists now
believe that Abe will delay that increase or postpone it
indefinitely, having learned from this tax hike............
From
The Economist
http://www.economist.com/news/finance-and-economics/21617031-harmful-tax-hike-and-reticent-employers-take-their-toll-slings-and-arrows
Architects
of Abenomics had issued dire warnings against raising the consumption
tax from 5% to 8% in April. The increase, aimed at improving Japan’s
parlous finances, was decided in 2012 under a previous government. As
in 1997, the last time politicians dared to raise the tax, consumer
spending has wilted.
Posted
byPaul Hunter (contact at paulhunter45177@gmail.com
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