IMF suggests that consumption tax should increased to 15% in Japan.

International Monetary Fund (IMF) published an anual report on Japanese economy and expressed their warning that spreading coronavirus is a risk for Japanese economy. Also, increasing the amount of social welfare expenditure can make government balance worse. IMF suggested that the consumption tax should be increased from 10% to 15%.

Paul Cashin said, “the amount of trade and investment between China and Japan will decrease. The sightseeing and retail industry will get severe damage because the number of tourists is reduced.

In the report, IMF suggests that Japanese government should increase consumption tax moderately in order to reduce their debt sustainability. If the consumption tax increased to 15%, the amount of budget deficit are estimated to be reduced to 2.5% of Gross Domestic Product (GDP). Also, cutting their social welfare expenditure, the deficit are supposed to decreased to at maximum 6%.