Draft policy guidelines by Japanese government advisers laid out new fiscal discipline targets aimed at achieving a primary budget surplus in fiscal 2025 instead of the prior target of fiscal 2020, Reuters reported May 28. Work toward that goal should start in fiscal 2019, said the advisers.
The draft proposed three mid-term goals for fiscal 2021: lowering the budget deficit-to-GDP ratio to less than 3%, lowering the debt-to-gross domestic product ratio to 180%, and halving the ratio of the primary budget deficit to gross domestic product.
The government advisers also recommended an increase in consumption tax to 10% from the current 8% in October 2019 and the introduction of economic stimulus measures using the initial budgets for fiscal 2019 and 2020, the Nikkei Asian Review reported May 28.
The draft guidelines called for measures to control the expected disruptions from a scheduled tax hike in 2019. When consumption tax was raised to 8% from 5% at the beginning of April 2014, demand spiked before the tax burden rose and dropped sharply afterward, said the Nikkei.
The draft proposals were submitted at a Council on Economic and Fiscal Policy meeting on May 28. The government will make its final decision on the targets by the end of June, said Reuters.
