The press conference in FCCJ


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Press conference at FCCJ

Masaaki Kanno, Hiromichi Shirakawa, Tax panel
12:30-14:00 Monday, September 30, 2013
Masaaki Kanno, Chief Economist, Japan, J.P. Morgan
Hiromichi Shirakawa, Chief Economist, Credit Suisse Securities Japan

JPモルガン証券株式会社チーフエコノミスト 菅野 雅明
クレディ・スイス証券株式会社チーフエコノミスト 白川 浩道




Feeling the Squeeze;What Will Be Wrought by the Consumption Tax Hike?

Prime Minister Shinzo Abe has been pondering for months the issue of whether or not to double Japan's consumption tax in two stages to 10 percent. While he's likely to announce on October 1st an initial increase to 8 percent in April, many questions remain. How will the government cushion a fall in demand after the levy rise and prevent a recession next year as happened last time the tax. was raised in 1997? Will the government press the Bank of Japan to ease further? Will it cut corporate or personal income taxes? Will the tax hike derail Abenomics?

Masaaki Kanno and Hiromichi Shirakawa were both on government-picked panels held to discuss the implications of the tax-hike plan. They have different perspective.

Kanno is in favor of raising the tax as planned, saying further increases should be considered to reassure investors the nation is serious about reining in the world's largest debt burden. He has called for 3 trillion yen in stimulus to offset the impact of the hike. Shirakawa, on the other hand, sees the tax hike pushing inflation up to 4 percent in April-June 2015, with wages struggling to catch up. Instead, he advocates a incremental rise of 1 percent each year.

Both speakers are former BOJ officials. Kanno, who earned an MA in economics from the University of Chicago, was chief foreign exchange trader at the central bank's international department before joining JP Morgan in 1999. Shirakawa, who studied at the University of Washington's Graduate School of Business, held such posts as the head of the BOJ's policy research group and special assistant to the governor. He has been chief economist at Credit Suisse since 1999.