Wounded Japan PM grapples with tax jinx after BOJ eases

When Prime Minister Shinzo Abe raised Japan's sales tax from April, he was betting he could break a jinx that has doomed leaders who raised the levy to losing their jobs. A shock move by the Bank of Japan on Friday to expand its massive asset-buying stimulus program - in the hope it will stoke inflation - could boost the chances of a rise in the unpopular levy from October, especially if followed by promises of added fiscal stimulus to help offset the pain. Raising the sales tax requires a strong nerve and reserves of political capital - the issue has been regarded as the "third rail" of Japanese politics ever since it was first promoted in 1979, and a previous increase in 1997 was blamed by many for killing an incipient recovery. So for proponents of the hike, who argue it is vital to curb Japan's huge public debt and fear delay would trigger a sell-off in government bonds and a spike in long-term interest rates, the timing for a decision is hardly auspicious.

via Business News http://ift.tt/10eiml3