This report from the Daily Telegraph (UK, no pay wall) tells us that Japan Prime Minister Yoshihiko Noda wants to call a snap election if the Diet will not pass bills required to double their currently 5% sales tax to 10% by 2015. This hike is extremely unpopular with the public, and lawmakers, even those of his own party, aren’t exactly thrilled by the idea of facing the voters on the wrong side of a tax issue. Noda is described as a fiscal hawk, but obviously he thinks the entire problem is on the government revenue side, not the government spending side.
Japan has a big debt load and a high deficit, but it self-finances its debt due to “excess” personal savings that Western economists think should be forced into the market through relentless inflationary policies. Japan has refused to do this. It’s not even necessarily true that jacking up the sales tax will do much more than strangling the economy further, but like I said, economic orthodoxy pushes hard towards inflation and currency depreciation; readers in the US and the UK may know what I’m talking about.
We’ll see how PM Noda deals with this taxing problem. If he wants to fight an election over it, that’s his head on the line, not mine. – J