Japanese PM expected to delay sales tax hike soon

Japanese Prime Minister Shinzo Abe is expected to announce the postponement of the planned sales tax hike and call a lower house election on Dec. 14 on Tuesday, local media reported citing ruling coalition official as saying.

The prime minister conveyed the message to his ruling coalition partner Monday after he returned to Tokyo from a summit of the Group of 20 in Australia, adding he would dissolve the lower house on Wednesday or Friday, reported Japan's Kyodo News Tuesday.

The government here on Monday released the economy data for the third quarter which said real gross domestic product shrank 0.4 percent in the reporting quarter for the second straight of decline, meaning Japan's economy slipped in technical recession.

The Japanese economy contracted an annualized real 7.1 percent in the second quarter of 2014 in the wake of the first round of tax change carried out on April 1 from 5 percent to 8 percent.

The newly released preliminary data is a key reference for Abe to decide whether or not to carry out the planned sales tax hike from 8 percent to 10 percent in October 2015.

By calling a halfway general election, analysts said that Abe is trying to take the advantages of the opposition's unpreparedness to win the election to extend his rule two more years to 2018 so as to better pass unpopular bills related to the rights to the collective self-defense.

The second consumption tax hike is expected to be postponed until April 2017 when there is no general election, according to local reports.

Abe is also expected to instruct his relevant ministers soon to compile a supplementary budget of around 3 trillion yen for the current fiscal year ending next March to revitalize the economy, said Kyodo.

The government is prepared to discuss details of its upcoming economic stimulus package at Tuesday's meeting of the Council on Economic and Fiscal Policy, said the report.