Japan Seen Needing $50 Billion Package to Cushion Sales-Tax Rise

Bloomberg (25/7) - Japanese Prime Minister Shinzo Abe, now sitting on the biggest parliamentary majority in six years, faces the threat of political dissent within months as a planned sales-tax rise threatens to arrest an economic rebound. The world’s third-largest economy has 30 percent odds of tipping into the fourth recession since 2008 should Abe bump the consumption levy to 8 percent in April from 5 percent, according to the median of 23 estimates in a Bloomberg News survey. He’ll need a 5 trillion yen ($50 billion) fiscal package to cushion the impact of the increase, the survey showed. Deteriorating growth would counter Abe’s promise to revive Japan from two decades of economic malaise, which swept his Liberal Democratic Party to power in December and won it a majority in the Diet’s upper house this month. At the same time, failing to implement the tax boost risks undermining confidence in Japan’s pledges to rein in the world’s largest debt burden.