Kuroda backs sales tax rise as BoJ keeps monetary policy on hold The central bank's governor, Haruhiko Kuroda, reiterated his support for a contentious plan to raise the national sales tax, saying the pro-growth policies implemented by the BoJ and the government of Shinzo Abe, prime minister, would offset the tax's potential ill effect on consumer demand. "We can do both," he said when asked about the difficulty of squaring a tax increase with the BoJ's goal of reversing persistent consumer-price deflation. There's a strong possibility that we can maintain a positive environment and keep growth above Japan's long-term potential. Advisers to Mr Abe have lined up on both sides of the sales tax issue. The government's own economists forecast last week that growth would slow to 1 per cent next fiscal year if the tax were raised from 5 to 8 per cent as planned in April 2014, while some private-sector economists predict a fall back into recession. At the same time, Mr Abe must consider Japan's vast public debt - fast approaching two and a half years' economic output - and the risk that reversing course could be interpreted by the public and investors as evidence of a broader unwillingness to take difficult decisions. The BoJ's board voted unanimously on Thursday to keep its policy on hold, a decision that was widely expected by analysts. Mr Kuroda committed the bank in April to doubling Japan's monetary base through dramatically increased purchases of government bonds and other assets. His goal is to turn a decade and a half of deflation into inflation of 2 per cent by 2015. Many economists believe the BoJ will need to pump even more money into the economy to achieve its target, but the bank is reluctant to take additional measures in the immediate future. A decision on whether to raise the sales tax is expected as early as September, meaning economic data are under more public scrutiny than usual. The last time Japan raised the tax, in 1997, a recession followed and the prime minister who approved the increase resigned. Supporters of the hike say conditions were more hazardous then, with less accommodative monetary policy and the onset of the Asian financial crisis. Mr Abe said on Thursday he would create a commission of economists and business leaders to assess the potential impact of the sales tax increase on the recovery. The planned rise from 5 to 8 per cent would take effect next April, in the first stage of an envisioned two-stage rise that would take it to 10 per cent in October 2015.