Japan hikes tax to tackle debt The Japanese will soon have to pay more in sales tax when they buy things as the government tries to reduce the country's runaway debt. Prime Minister Shinzo Abe's cabinet agreed the VAT increase to eight percent from five percent. It will go up next April with a future hike taking it to 10 percent. At the same time Abe announced an economic stimulus package worth the equivalent of around 37 billion euros. Economists have warned the tax hike will reduce growth which strengthened in the first half of the year. Before proceeding with the tax increase, Abe had, by law, to confirm that Japan's economy is strong enough to cope with it. The increase is to try to address public debt which is more than twice the size of Japan's economy - the heaviest debt load in the industrial world. More about: Debt rating, Economic growth, Japanese economy, Taxes