Japan PM Abe considers sales tax hike delay, snap election: media

Japan's Prime Minister Shinzo Abe speaks to the media at his official residence in Tokyo October 20, 2014. REUTERS/Toru Hanai

TOKYO (Reuters) - Japan’s Prime Minister Shinzo Abe is considering dissolving the lower house of parliament and calling a snap election if he decides to delay a plan to raise the sales tax next year, the Yomiuri newspaper reported.

If Abe does dissolve the lower house, an election could be held on Dec. 14 or Dec. 21, the Yomiuri reported on Sunday citing several government and ruling party sources.

Abe has also told members of his party’s coalition partner of this plan, the Yomiuri said.

In a television interview on Friday, Abe said he was not thinking of calling an early election, but then he hedged his bets by saying this is something a prime minister always has to say.

Abe has to decide by year’s end whether to go through with a plan to raise the sales tax to 10 percent from 8 percent in October 2015.

Abe could delay this plan by a year and a half if third quarter gross domestic product, which is due on Nov. 17, struggles to accelerate, the Yomiuri said.

If Abe does delay the tax hike he would call an election to ask the public to judge his economic policies, the Yomiuri said.

A delay is not without its risks, because next year’s sales tax hike has already been passed into law and Abe would have to repeal this in parliament.

Abe could also be criticised for delaying a plan that is needed to earn tax revenue for rising welfare spending.

Reporting by Stanley White