So I think it is safer - and I told the prime minister this - not to make too many bold and adventurous moves at this time when financial markets are so sensitive. The consumption tax should be used in the future, but that is not right now. The government should think about other taxes, like carbon taxes that don't interfere with price mechanisms while making the country greener. Yes I think it would - as we found out the last time. The next consumption tax hike is like a black cloud hanging over the economy when we just had a storm. The impact of the last storm was very hard for Japanese consumers. If they see another black cloud on the horizon that will impact their willingness to spend. Mr Abe has been perceived as a dove on the consumption tax hike so people in Japan have started to believe that the hike may not come next year. So if everybody believes it won't occur and he decides it will go ahead, unless there's some striking economic good news happens it will hit the economy. So I am advocating postponing. However, Abe needs to express very firmly why he has to delay. Yes. But if he does that then legally he will have to call an election and he's very cautious about that. There are political constraints at work and calling an election in the lower house election when he has a strong mandate may be risky, so he may want to keep it secret or undetermined. I think the trauma of long term stagnation is entrenched in Japan. This experience of long term stagnation - two decades - has made firms very conservative in distributing higher wages and against increasing dividends and investing in real assets because of worries that the Japanese economy might fall into another stagnation. I agree with the Toyota CEO that the government shouldn't try to force companies to raise wages. Japan is not a socialist country, it is a market economy, so ultimately the responsibility to determine wage increases is up to firms, and not for the government.
The ' Godfather ' of finance , mark Hamada , warns that Japan risks being sucked into a fresh financial crisis unless the imminent sales tax increase from 8 % to 10 % next April is shelved . He reportedly states that if Japanese consumers " see another black cloud on the horizon that will impact their willingness to spend . " Although he supports the increase , he believes the government needs to stop it until it is confident Japan 's economy can handle another rise . This comes as reports say that the Bank of finance 's negative rates risk , which we previously highlighted , is affecting the loan market as the freeze looks set to extend into a third month .