Japan PM calls snap election in December, puts off tax hike
20 Nov 2014 5:06 AM IST
Despite those policies, the Japanese economy slipped into a recession last quarter after a sales tax increase in April crushed consumer and business spending. That forced Abe to delay the second hike planned for October next year until April 2017.
Abe said on Tuesday he will dissolve parliament on Friday. He wants an election as soon as possible, which would be mid-December, to seek public approval for his tax decision and for his overall ‘Abenomics’ policies of extreme monetary easing, heavy government spending and economic reforms. The government and the Bank of Japan have pumped hundreds of billions of dollars into the economy in the two years since Abe was elected.
‘I realize this election will be tough, but I need to hear the voice of the people,’’ Abe told a news conference. ‘I will step down if we fail to keep our majority because that would mean our Abenomics is rejected.’
The delay in raising the sales tax to 10 percent from the current 8 percent will slow Japan’s work on repairing its tattered public finances. But Abe said the risk to the world’s third-largest economy was a bigger threat.
Fresh elections may seem a puzzling decision given Abe is only half way through his term and the latest economic news is dismal. However Abe’s ruling Liberal Democrats have a solid majority and hope to further consolidate their power at a time when opposition parties are weak and in disarray.
Abe described his strategies as the ‘only path’’ for Japan to escape its economic malaise.
‘Some people say Abenomics has failed or it’s not performing well,’’ he said. ‘But then what should we be doing?’’ Japan has bubbled with speculation of an early election since early this month. The Liberal Democrats have been coaching freshman lawmakers on campaign strategies and opposition parties have rushed to discuss possible new alliances, as campaign posters went up in Tokyo neighborhoods.
Abe got a rare second term as prime minister after stepping down just a year into his rocky first term in office in 2006-2007. His support ratings started out high as share prices surged in early 2013. But they have fallen recently. Parliament got bogged down in squabbles over campaign finance scandals that led to resignations of two of his cabinet ministers within weeks of an early September reshuffle.
By dissolving parliament for an election Abe can clear the slate and once again reshuffle his cabinet, said Michael Cucek, a Tokyo-based analyst and fellow at Temple University Japan. Abe pointed to progress in terms of an improved job market and modest increases in wages for some workers. ‘We’ve kept moving ahead. We must not stop now,’’ he said.
Opposition party leaders, already resigned to Abe’s plan, said they could not oppose the delay in the sales tax increase, given the feeble state of the economy. At over a quadrillion yen ($8.6 trillion), Japan’s public debt is the biggest among developed nations and over twice the size of the economy. But since most of the debt is held by the Bank of Japan and other Japanese financial institutions, it is considered relatively stable.
Abe said on Tuesday he will dissolve parliament on Friday. He wants an election as soon as possible, which would be mid-December, to seek public approval for his tax decision and for his overall ‘Abenomics’ policies of extreme monetary easing, heavy government spending and economic reforms. The government and the Bank of Japan have pumped hundreds of billions of dollars into the economy in the two years since Abe was elected.
‘I realize this election will be tough, but I need to hear the voice of the people,’’ Abe told a news conference. ‘I will step down if we fail to keep our majority because that would mean our Abenomics is rejected.’
The delay in raising the sales tax to 10 percent from the current 8 percent will slow Japan’s work on repairing its tattered public finances. But Abe said the risk to the world’s third-largest economy was a bigger threat.
Fresh elections may seem a puzzling decision given Abe is only half way through his term and the latest economic news is dismal. However Abe’s ruling Liberal Democrats have a solid majority and hope to further consolidate their power at a time when opposition parties are weak and in disarray.
Abe described his strategies as the ‘only path’’ for Japan to escape its economic malaise.
‘Some people say Abenomics has failed or it’s not performing well,’’ he said. ‘But then what should we be doing?’’ Japan has bubbled with speculation of an early election since early this month. The Liberal Democrats have been coaching freshman lawmakers on campaign strategies and opposition parties have rushed to discuss possible new alliances, as campaign posters went up in Tokyo neighborhoods.
Abe got a rare second term as prime minister after stepping down just a year into his rocky first term in office in 2006-2007. His support ratings started out high as share prices surged in early 2013. But they have fallen recently. Parliament got bogged down in squabbles over campaign finance scandals that led to resignations of two of his cabinet ministers within weeks of an early September reshuffle.
By dissolving parliament for an election Abe can clear the slate and once again reshuffle his cabinet, said Michael Cucek, a Tokyo-based analyst and fellow at Temple University Japan. Abe pointed to progress in terms of an improved job market and modest increases in wages for some workers. ‘We’ve kept moving ahead. We must not stop now,’’ he said.
Opposition party leaders, already resigned to Abe’s plan, said they could not oppose the delay in the sales tax increase, given the feeble state of the economy. At over a quadrillion yen ($8.6 trillion), Japan’s public debt is the biggest among developed nations and over twice the size of the economy. But since most of the debt is held by the Bank of Japan and other Japanese financial institutions, it is considered relatively stable.
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