The forecast is part of the annual budget
review. The government projects about 50 trillion yen ($480.33
billion) in tax revenue for the coming fiscal year based on the
growth forecast.
While the higher sales tax is expected to curb consumption, the
government expects positive economic growth thanks to the
effects of a fiscal and monetary stimulus.
The national sales tax is set to rise to 8 percent in April and
could rise to 10 percent in 2015 if the government of Prime
Minister Shinzo Abe goes ahead with its fiscal consolidation
plan.
The government also forecast that consumer prices will rise by
about 1.2 percent in the 2014 fiscal year, without considering
an impact from the sales tax hike. Consumer prices are expected
to show a rise of 0.7 percent in the current fiscal year. The
Bank of Japan launched a massive monetary stimulus program aimed
at pushing the inflation rate up to 2.0 percent in two years, in
a bid to wrench the country out of a long phase of deflation.
($1 = 104.0950 Japanese yen)
(Reporting by Yuko Yoshikawa,
writing by Yuka Obayashi; editing by Simon Cameron-Moore)
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