Sources told Reuters that Japan was mulling over a JPY 5 trillion or USD 50 billion economic stimulus plan to offset the possible repercussions of an increase in the national tax. Japanese Prime Minister Shinzo Abe gave instructions to his government officials to have a draft of the monetary stimulus package by the end of September.
Abe was scheduled to raise the tax to 8% in October from April's 5%. The increase was meant to help the Japanese government contain its public debt. According to Reuters, Japan's debt is more than two times its yearly economic output. That made it the biggest in the world, the news agency said.
Government estimates revealed that for every single percentage point increase in tax, the government can generate revenues of about JPY 2.7 trillion. Chief Cabinet Secretary Yoshihide Suga told Reuters that the size and contents of any stimulus package would still need to be studied by Finance Minister Taro Aso and Economics Minister Akira Amari.
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