Japan Prime Minister Shinzo Abe Mulls Delay In Hike Of Sales Tax, Snap Elections: Report

(Reuters) -- Japan’s Prime Minister Shinzo Abe is considering dissolving the lower house of parliament and calling snap elections should he decide to delay a plan to raise the sales tax next year, the Yomiuri newspaper reported Sunday. If Abe does dissolve the lower house, then elections could be held either Dec. 14 or Dec. 21, the Yomiuri said, citing several government and ruling party sources. Abe has also told members of his party’s coalition partner of this plan, the newspaper said.

In a television interview Friday, Abe said he was not thinking of calling early elections, 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. He could delay this plan by a year and a half should Japan’s third-quarter gross domestic product have struggled to accelerate, the Yomiuri said. The Q3 GDP report is due to be released Nov. 17.

If Abe does delay the tax hike, then he would call elections to ask the public to judge his economic policies, aka Abenomics, 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. He could also be criticized for delaying a plan that is needed to earn tax revenue for rising welfare spending.

(Reporting by Stanley White)