Snap election called in Japan

Japan’s Prime Minister Shinzo Abe has called an early election – two years ahead of schedule. He dissolved parliament this week and is delaying a planned, but unpopular, increase in sales tax. Abe was elected two years ago with an ambitious plan to revive the economy, but many commentators believe he has struggled to do so. His popularity has fallen but he is expected to win the election, which will take place in mid-December. Abe’s party, the Liberal Democrats, already has a majority in the lower house, but analysts say Abe hopes to consolidate power over an opposition party that’s in disarray. He also wants public support to continue to press ahead with “Abenomics” – his ambitious ideas to kick-start Japan’s stagnant economic growth using heavy government spending and economic reforms. “I need to hear the voice of the people,” says Abe. “I will step down if we fail to keep our majority because that would mean our Abenomics is rejected.” One of his senior advisers comments that instability is the last thing voters want. “Many people still remember how chaotic Japan’s revolving-door politics were when the prime minister changed once every year,” says Tomohiko Taniguchi, special adviser to Abe’s cabinet.

Japanese not spending

The rise in Japan’s sales tax was brought in by the previous government in 2012 to curb the country’s huge public debt, which is the highest among developed nations. The first rise – from five per cent to eight per cent – took place in April. Abe’s government hoped this hike would boost government income, but consumers stopped spending instead. The consumption tax increase has also affected sales of new motor vehicles, which fell by six per cent to 396,508 units in October when compared to the same month of last year. It was the fourth consecutive month of drops following April’s tax hike. The second increase in sales tax to 10 per cent was set for October 2015, but that’s expected to be delayed by at least 18 months.