Manipulations behind the consumption tax increase: The ministry of finance prolongs Japan's recession

The April 1997 increase in Japan's consumption tax met little public opposition, thanks mainly to careful manipulation of the news media by the Ministry of Finance. Attention was adroitly shifted from the need for deficit financing-which the government wanted to avoid-to the alternative of a higher consumption tax. However, it quickly became apparent that the increase was a major contributor to prolonging Japan's recession. Domestic political pressures have prevented lowering the rate, despite U.S. appeals for Japan to reduce the consumption tax as a means of strengthening its economy.