Currently, the Japanese economy is quickly falling. A combination of deflation and the rising yen are both major factors crippling the country’s funds. Japanese Prime Minister Naoto Kan has recently endorsed ¥5.05 trillion stimulus package which equals about 0.6% of the nation’s economic output. This money will roughly create or retain 450,000-500,000 jobs. However, where are these funds coming from? The huge amount of funding is getting generated from last years left over funds and the money saved because of the decrease in repayment interests for national bonds. On top of this, the funds are expected to come from tax increases. This stimulus package is aimed to re-established the power of small and middle class companies struggling in current economic conditions. You many ask if raising taxes will be a bad idea, but Japan’s taxes are currently 5%. Quite low compared to many of the developed countries, especially European ones which have up to 25%.
So I think its time for Japan to make a decision; raise taxes and contribute a little bit more, or just watch the country enter a complete state of economic depression.



