TOKYO: Japan’s Prime Minister Shinzo Abe told his party on Tuesday he was calling a snap general election and delay a planned sales tax rise, the day after figures showed the country was in recession.
“Prime Minister Abe expressed his intention at an extraordinary board meeting of his Liberal Democratic Party that he would dissolve the House of Representatives,” Jiji Press said.
The vote, which is likely to come in mid-December, is two years earlier than necessary.
Less than two years after he swept to power pledging to reinvigorate the country’s flagging economy, Abe is expected to say more needs to be done to fix years of growth-sapping price-falls.
“We are eventually taking the opportunity to get rid of deflation,” Abe told a meeting of lawmakers and officials from his junior coalition partner Komeito.
The last 24 months have seen two of the so-called “three arrows” of “Abenomics” fired—massive fiscal stimulus and a flood of easy money. A third “arrow” of structural reforms is stuck in the quiver, a victim of the vested interests it is intended to undermine.
At its heart, Abenomics is intended to push prices up and get shoppers spending, with the aim of generating a self-reinforcing recovery as companies employ more people to meet growing demand.
The measures have sent the yen plunging, pushing up the cost of imports, including the fossil fuels used to power the country.
That stretched consumers—60 percent of the economy—who were then walloped again in April after sales taxes rose from 5.0 to 8.0 percent, resulting in two consecutive quarters of contraction.
Abe is almost certain on Tuesday to say he is delaying part two of the tax rise—to 10.0 percent— which is due for October.
“I will judge the consumption tax calmly,” he said. “People’s life won’t get better without economic growth,” Abe added.
Opposition in disarray
Opposition parties, who are still in disarray after their 2012 drubbing, will be hoping to capitalize on the difficulties experienced by voters whose wages are at a standstill while prices go up.
“It is clear that Abenomics has not had any positive impact on people’s life at all,” said Banri Kaieda, head of the largest opposition Democratic Party of Japan.
Yoshiki Yamashita, a Communist Party lawmaker, also said “Abenomics merely expanded the gap” between the haves and the have-nots.
But commentators across the spectrum agree that Abe, who enjoys approval ratings around 50 percent, is likely to stroll home in the popular vote, and point out that the premier’s real target is rivals within his own fractious Liberal Democratic Party.
The thinking goes that as he faces a three-yearly party leadership election in September, he could stamp his authority over the grouping by resetting the clock now.
A new mandate would bolster his case for pushing ahead with the re-start of nuclear reactors—an unpopular idea in a nation scarred by the Fukushima dsaster.
It would also strengthen his hand on pet issues like reforming Japan’s view of its 20th century war-mongering, which he and other right-wingers say is masochistic.