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Tax hike delay could hurt Japan’s finances: Minister

CNBC logo CNBC 7/06/2016 Leslie Shaffer
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A delay in hiking the sales tax could hurt Japan's finances, the country's state minister of finance said Tuesday.

Manubu Sakai told the Nomura Investment Forum in Singapore that the aim was to boost tax revenues through sustainable economic revitalization but admitted that the country must put the brakes on borrowing.

"If Government debt is not stopped from increasing, Japan will lose credibility," he said.

Japan's Prime Minister Shinzo Abe last week announced another delay to a planned tax hike and detailed a new stimulus package for the economy this fall. 

Sakai said Japan had exited deflation and Abenomics was evolving to meet to goal of increasing Gross domestic product (GDP) to 600 trillion yen ($5.56 trillion) by 2020, from the current 500 trillion yen.

Among initiatives to boost the economy, Prime Minister Shinzo Abe is pursuing a 3 percent increase to the minimum wage and "same job, same wage" policies, Sakai said, according to translated remarks.

He noted that 40 percent of Japan' s workforce was unregulated and found it difficult to shift to full-time employment. The number of workers giving up hope of getting married and having children is "not small," Sakai said.

Abenomics aims to raise the birthrate, among the lowest in the world, to 1.8 children per woman from the current 1.3, Sakai said.

The world is also experiencing its fourth industrial revolution and Abe plans to set up a council to design an investment strategy, including deregulation, research and development, and human resources, Sakai said. The combined public and private investment is expected to be 4 percent of GDP, he said. More "green cards" will also be issued to foreign workers to improve the talent pool, he said.

He added that Abenomics was not meant to only benefit Japan, citing Sharp (6753.T-JP)'s decision to choose Hon Hai as a partner.

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