TOKYO (Reuters) - Japanese Finance Minister Taro Aso said on Friday that compiling an extra budget to offset the blow from a sales tax hike scheduled for next year is one option available to the government.
Aso, speaking in the lower house financial affairs committee, also warned about the risks of not carrying out the tax hike.
Delaying the tax hike “could raise market doubts over Japan’s resolve to restore its finances ... and it’s hard to predict how markets would react to such a decision,” Aso told parliament.
The government has to decide by the end of the year whether to raise the sales tax to 10 percent in October 2015. The government raised the sales tax to 8 percent in April to pay for welfare spending, but this did more damage to the economy than expected, raising concerns the economy cannot withstand another tax hike.
Reporting by Stanley White; Editing by Chris Gallagher