TOKYO -- Japan is considering setting aside 1 trillion yen for stimulus measures in fiscal 2015 to help stave off a blow from a consumption tax hike planned for October next year.
The cash reserve, to be earmarked in next fiscal year's budget, would enable the government to act flexibly to kick-start the economy if the tax is in fact raised as scheduled. The money can be spent on any stimulus measures, including public-works projects and subsidies for small and midsize businesses, depending on economic conditions.
With an end to Japan's nagging deflation finally in sight, Prime Minister Shinzo Abe's administration choose not to set aside stimulus spending funds in fiscal 2013 and 2014. But with a final decision on raising the sales tax to 10% from 8% expected as soon as early December, the government is considering a safety net to prevent the economy from faltering.
The figure would be capped at a relatively modest 1 trillion yen given Japan's goal of halving its primary balance deficit in fiscal 2015 from fiscal 2010 levels.