By Stanley White and Minami Funakoshi
TOKYO (Reuters) - U.S. Nobel laureate and economist Joseph Stiglitz said on Wednesday that he had advised Japan's Prime Minister Shinzo Abe to delay a sales tax increase scheduled for next year and focus more on fiscal spending to boost a recovery from recession.
Abe is meeting with foreign economists to help him prepare for hosting a Group of Seven summit that will be hosted by Japan in May. Stiglitz told Abe that G7 need to coordinate policy as weak aggregate demand was harming the global economy and contributing to income disparity.
The G7 talks, according to some economists, could give Abe a convenient reason to postpone tax hikes, relax fiscal austerity and introduce more stimulus to avoid relying too much on monetary policy.
"A consumption tax increase now would be going in the wrong direction," said Stiglitz, a professor at Columbia University.
"This is a time to have stimulating fiscal policy."
Abe is scheduled to raise the nationwide sales tax to 10 percent from 8 percent in April next year, but some of Abe's closest advisers are calling for the plan to be shelved.
Abe raised the levy to 8 percent from 5 percent in April 2014, as agreed under the previous government to curb Japan's massive public debt, but the move triggered a recession and some economists say consumer spending still has not fully recovered.
Stiglitz told Abe Japan's government needs to adapt its policies in response to changes in the economy, and that taxes on carbon emissions could be a better way to spur innovation and improve domestic demand.
A G20 summit last month called for more fiscal spending and less reliance on monetary policy to help the fragile global economy, which some investors say has reached its limit after years of quantitative easing and negative real interest rates.
