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Abe bets on tax increase to fix Japan's tattered finances
Japans Prime Minister has announced a 3 percentage point hike in the country’s sales tax.
Shinzo Abe is taking advantage of an economic recovery to start tackling Japan’s soaring public debt.
The consumption tax will be increased to 8 percent in April 2014, with the option to raise it by an additional 2 percentage points by 2015.
The increase in tax will raise an additional USD 81.42 billion and Abe says will help "maintain confidence" in Japan's fiscal health.
To soften the economic blow, Abe has also drawn up a new economic stimulus package worth USD 50 billion.
The plan will include funding for roads and transportation, in preparation for the 2020 Tokyo Olympics.
Abe cited Tuesdays Tankan outcome as a key factor in his decision to raise the tax. Sentiment among the country's large manufacturers improved more than expected to close to a 6 year high.
Abe's economic reforms have been widely welcomed by investors, with Japan's stock market up 42 percent so far this year. But Mads Koefoed says while there are still some opportunities out there, most of the gains have already been made.
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