TOKYO — Prime Minister Yoshihiko Noda’s plan to double Japan’s sales tax was approved by Parliament on Friday after months of haggling, but only after Mr. Noda promised opposition lawmakers that he would call early elections — a move that is likely to end his term in office and his party’s hold on power. 
Despite low popularity ratings, Mr. Noda, who took office last September, has pushed ahead with the plan to raise the tax to 10 percent from 5 percent by 2015, an increase he says is necessary to start reducing the country’s debt.
Did they bother to consider more spending cuts instead of raising taxes?  Last year, Japan cut 3.6% out of the budget.  They can cut a lot more if they are serious in getting their debt problems under control.  Their debt is about twice the size of their $5 trillion economy.

Policies to stimulate growth need to be implemented.  Doubling the sales tax will not do this, but will hinder growth even more.

This will also not help with their tourism industry that was rocked by the earthquake, tsunami and radiation problems last year.  Foreigners already have issues with the strong yen that is not getting them a reasonable foreign exchange rate.  This is further eroding their purchasing power in Japan even more.

The template for economic growth were the polices put forward by President Ronald Reagan in the 1980s.  Reaganomics eventually led to the balanced budgets under President Bill Clinton and the Republican Congress in the 1990s.

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