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'Japanese tax rise needed to increase market confidence'

Japan is to raise the rate of sales tax to 8% from 1 April next year, from the current 5%.

Policymakers say it is needed to reduce Japan's public debt - currently more than twice its gross domestic product (GDP) - but there are concerns it could hurt domestic demand.

Government adviser Professor Naoyuki Yoshino told BBC World it would increase market confidence that "Prime Minister Abe is going to reduce our budget deficit".

However, he admitted he was concerned the "increase of the sales tax might discourage some consumption" as had happened following a rise in 1997.

  • 01 Oct 2013
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