So says William Pesek:
Even as Japan’s economy struggles to shake off an April sales-tax increase, lawmakers are mulling another. In a meeting with Prime Minister Shinzo Abe last week, Krugman warned the move could be the death-knell of “Abenomics,” no matter how many yen the Bank of Japan prints. And he’s absolutely right. Raising taxes on households again would further crimp spending and doom any chance of reaching the 2 percent inflation target the government has set for itself.
And strange to say, I agree with this view.
Seriously: I understand that Japan’s long-run fiscal position is problematic, but I don’t think fears of an imminent fiscal crisis make sense — and on the other side, it’s now or never on breaking out of the deflation trap, which is crucial even for the fiscal future. Now is no time to lose momentum on Abenomics.