A
much maligned sales tax has been put on the back burner as Japan’s PM calls for
dissolution of government.
Japan’s
Prime Minister Shinzo Abe has called for an early election in order to garner
public support and tighten his grip on power over an opposition party
struggling to keep up a united counter front.
Abe’s much talked of strategy to revive a
flagging Japanese economy, “Abenomics”, has failed to hit the ground running and
the country’s growth has continued to stagnate.
He announced in a press release last week
that he would “dissolve the lower house as of the 21st,” and added
that he “needs to know the population support our economic plan. If we are
voted down then our Abenomics are clearly an unwanted reform.”
Expert financial spectators are admiring
the move and say the PM wants to eliminate any possibility of political
instability before proceeding.
“Japan is a far cry from the times when
there would be a change of PM whenever the wind turned direction,” said Tony
Harris, Senior Vice President of Equity Trading at Softbank CIBC International.
“Abe is looking to solidify his position
just in case public opinion moves against him as he puts his Abenomics into
fourth gear,” he added.
Not
the desired result
The plan, by the previous administration,
was for a jump in sales tax to curtail Japan’s massive public debt; however the
policy had a disastrous side effect.
Japans consumers simply stopped buying on
the high street, and the government never got its income boost.
Data is now showing that Japan, the world’s
third largest economy, is in the grip of a recession.
In response to that, Abe’s popularity has
waned and opinion polls now have him at just 50 percent, his lowest level since
he was elected prime minister two years ago, a factor that has forced him to
call for the election early.
