The summer heat has dropped noticeably in recent days, but this week the“Government’s Overhaul Meeting on Verification of the Impact of the Consumption Tax Rate” saw pretty heated arguments. In the coming sessions, authorities from various areas will offer their opinions in order to help the Prime Minister make his final decision in early October.
The aim of the meeting is to receive diverse opinions from experts in different fields. However, because many of the experts scheduled to attend the sessions are proponents of the tax increase, it is understandable that some criticize the effort by saying, “Discussions are merely to confirm the conclusion that has already been made.”
We can’t simply postpone a conclusion of the debate, though. The issue didn’t receive much focus in the last election–probably intentionally–but now that the basis for stable administration is being built, it’s time to make the decision.
Along with the outcome of the country’s ongoing TPP (Trans-Pacific Partnership) negotiations with neighboring Asia-Pacific nations, the issue of raising the consumption tax rate will have tremendous impact on Japan’s industrial structure and domestic economy going forward. These are two key issues we must watch for a while.
Focus on the Number of August Bankruptcies
Looking back on the national economy over the past month, no major bankruptcy has been reported and the number of references regarding bankruptcy has become fairly stable.
Not many companies were in focus, in terms of bankruptcy, late last month into this month. If I had to mention one, it would be Company A in the paper industry, whose name has been frequently referenced.
Statistics show that bankruptcies are relatively low in January, February and August each year. The government will soon calculate the August bankruptcy number, so it will be interesting to see how this year’s number fares.
The “National Corporate Bankruptcy Data,” as of August, will be released in early September. If the August number is higher compared to the same month of last year, it will be the third consecutive month of year-on-year increase. The last time corporate bankruptcies rose three months in a row was August 2009 before the enactment of the SME Finance Facilitation Act. If we see an increase in bankruptcies, it will mark a “turning point” in the long-lasting trend of decline and therefore warrant attention.
Speaking of statistics, today (the 30th) is traditionally a busy one, as various economic indicators are announced. The many key indicators released today include the unemployment rate, jobs-to-applicants ratio and other employment-related indicators, as well as flash reports on the Consumer Price Index, Industrial Production Index and others that the market watches closely.
Needless to say, their figures will also provide important reference information on which to make the decision regarding a consumption tax increase. We must take time between our coverage of bankruptcies to check these indicators, too. It’s the last day of the month, so we won’t be able to avoid another busy day.