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Tuesday, November 18, 2014, 19:21

Abe to dissolve lower house, delays sales tax hike

By Agencies
 Abe to dissolve lower house, delays sales tax hike

Japan's Prime Minister Shinzo Abe speaks during a press conference at his official residence in Tokyo, Nov18, 2014. (AP Photo/Shizuo Kambayashi)

TOKYO - Japanese Prime Minister Shinzo Abe said on Tuesday he would delay a planned rise in the nation's sales tax to 10 percent till April 2017 and call a snap election to seek a fresh mandate, just two years after taking office.

The economy unexpectedly slipped into recession in the third quarter, data released on Monday showed, a sign the pain from an initial rise in the sales tax to 8 percent from 5 percent in April was lasting longer than expected.

Abe said he would dissolve parliament on Nov. 21.

The consumption tax hike was planned to be carried out in October 2015 and the prime minister said the tax hike will not be delayed again.

Abe said that Japan's economy has yet to return to the path of recovery and the first round sales tax hike had an adverse impact on economic growth.

Japan will craft an extra budget in the current fiscal year to boost consumption, he added.

No general election need be held until late 2016. But political insiders say Abe - who returned to power in December 2012 pledging to fix the economy with his "Abenomics" strategy of ultra-loose monetary policy, spending and reforms - wants to lock in his mandate while his ratings are relatively high and before tackling unpopular policies next year.

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