The publication of strong GDP figures for the first quarter of 2013 means that the conditional Japanese Consumption Tax rise from 5% to 10% is now likely to go ahead.
The increase in Japanese Consumption Tax to 10% was first proposed in July 2012. It was submitted to help fund the social costs of a rapidly ageing population, and large public debt. The plan is to raise the Japanese VAT rate in two stages: to 8% on 1 April 2014; and then to 10% on 1 October 2015.
However, a condition introduced to the Tax Bill stipulated that Japan’s economy must be growing again. The latest quarterly result of 0.9% growth in the quarter is relatively strong in global terms. It is likely that a final decision will be taken after the second quarter results are published.
You can read more about the Japanese Consumption Tax rise transitional details here.