Will Doubling Their Sales Tax Help Japan’s Economy?

Yen Japanese
Early Monday morning at the Research Institute of Japan in Tokyo, Bank of Japan Governor Haruhiko Kuroda said that “I do not think that raising the sales tax as currently planned will do any great harm to the economy,”.

Shinzo Abe could possibly raise sales tax by 10%. The BOJ thinks that this could stabilize long-term yields. Obviously this is a very controversial issue within the country of Japan. Doubling sales tax is an unconventional approach to help the desperate Japanese economy.

Governor Kuroda was appointed by Prime Minister Shinzo Abe earlier this year. When Shinzo Abe took power again in late 2012, he was known as someone who wanted to weaken the Yen. His appointed BOJ leader likely has the same intention.

The yen weakness in the Forex Market was very consistent from last September of 2012 through Spring of this year. After pulling back for a short time, Yen weakness seemed to kick back in. How this sales tax will affect the markets will be revealed soon if the BOJ continues with their plan.

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