JCER forecasts that the Japanese economy will be sluggish in FY2016 due to the slowing down of the global economy, particularly in emerging nations, and the strong local earthquake that struck the Kumamoto Region in Kyushu. The government is scheduled to increase the consumption tax rate to 10% in April 2017, but this may be postponed. The consumption tax hike to 10% is essentially unavoidable to address the current issues, including the low birthrate, aging population and the repayment of massive public debt. If the tax hike is postponed every time the economic situation worsens, trust will be lost in the finances of Japan and the risk of financial failure may increase. In order to draw a path to fiscal consolidation while paying attention to the economy, we propose to establish a Fiscal Evaluation Council that presents economic and financial prospects independently from the government, and sets goals for fiscal consolidation, including social security reform.

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