TOKYO, April 18 (Reuters) - Japan might delay again a sales tax hike planned for October if the Bank of Japan’s next quarterly “tankan” survey shows deterioration in the economy, a senior ruling party official who’s close to Prime Minister Shinzo Abe said on Thursday.
“The economy is slowing a bit. If the BOJ’s June tankan shows a danger ahead, we cannot take everyone to a cliff edge,” Kyodo news quoted Koichi Hagiuda, acting secretary-general of Abe’s Liberal Democratic Party (LDP), as saying.
“We still have time” before deciding whether to go ahead with the tax hike to 10 percent from 8 percent, he told an Internet TV programme, adding that Abe would call an election if he decides to put it off, according to Kyodo.
However, Hagiuda said it would be “difficult” to call a general election for the lower house to coincide with upper house elections planned in the summer, citing a tight schedule due to Group of 20 leaders’ summit in Japan in late June.
Hagiuda’s comments rekindled speculation Abe might postpone the twice-delayed tax hike despite his repeated pledge to go ahead it, barring a big economic shock.
The previous tax increase to 8 percent from 5 percent in April 2014 hit consumers hard and triggered a sharp slump in the world’s third-largest economy.
Abe has put fiscal reform - needed to fix the industrial world’s heaviest public debt burden - on the backburner.
He has already planned to spend 2 trillion yen ($17.87 billion) on moves to offset the blow to consumers from a 10 percent sales tax.
The Organisation for Economic Cooperation and Development (OECD) urged Japan on Monday to raise the sales tax to as high as 26 percent, underscoring the need for the country to boost finances as its population rapidly ages.
Chief Cabinet Secretary quickly shrugged off Hagiuda’s remarks, saying the government’s stance remains unchanged that it will guide the economy to ensure the planned hike, barring an economic crisis on the scale of “Lehman shock” or disasters.
$1 = 111.91 yen Reporting by Tetsushi Kajimoto; Editing by Richard Borsuk