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Kishida's intention to raise consumption tax in focus at Diet

75 Comments
By Satoshi Iizuka

A crucial issue cropped up at Japan's regular Diet session that convened Monday -- whether Prime Minister Fumio Kishida will look to hike the politically unpopular consumption tax to cover the child policies he is trying to advance.

Kishida has pledged to focus on child policies in 2023 in an apparent attempt to buoy the sagging popularity of his Cabinet by appealing to young parents, ahead of a string of local elections in the spring.

But Kishida no longer has the adequate political strength to carry out such a reform, particularly as previous governments struggled to even propose such a hike, analysts said.

A defeat in the unified local election and by-elections to fill vacant lower house seats in April could prompt a movement to oust Kishida from power, jeopardizing his cherished goal of hosting the Group of Seven summit in May in his home constituency of Hiroshima, they added.

During the 150-day parliamentary session, Kishida is set to be grilled by the opposition bloc over dubious ties between lawmakers in his Liberal Democratic Party and the controversial Unification Church as well as a series of resignations by scandal-tainted ministers.

Many fear a consumption tax hike could drag down business and household spending, hampering economic growth. As such, debate on the tax has suddenly heated up even though Kishida has yet to hammer out details of his child-rearing policies.

In his policy speech at the beginning of the Diet session on Monday, Kishida promised to take steps to tackle Japan's rapidly declining population, vowing to present a general framework aimed at "doubling" the children-related budget by June.

But it was only last month that the government decided to roughly double its defense spending over the next five years and to acquire enemy base strike capabilities to deter attacks in a major shift in its security policy amid mounting regional military threats.

The Kishida administration has voiced its eagerness to raise corporate, income and tobacco taxes "at an appropriate time" in fiscal 2024 or later to secure roughly 1 trillion yen in fiscal 2027 to beef up Japan's defense capabilities.

Opposition parties have lambasted Kishida for having made such significant decisions without sufficient discussion after last year's extraordinary parliamentary session closed in December.

Jun Azumi, the leading opposition Constitutional Democratic Party of Japan's Diet affairs chief, has expressed readiness to take on the government, saying, "We will face up to the Kishida administration, which is on track for tax hikes."

Kishida's sudden pitch for child policies comes as data is set to show that the number of babies born in Japan in 2022 likely fell below 800,000 for the first time since the government began compiling statistics on births in 1899.

In a bid to stave off the plunging birthrate, the administration is scheduled in April to establish a new agency to deal with problems surrounding child-rearing and family affairs, allocating around 5 trillion yen in the draft budget for the next fiscal year.

Kishida has said his child policies will concentrate on three fields -- strengthening economic support centering on bigger child benefits, expanding services for families raising children and promoting reforms on work style and childcare leave.

The premier has instructed the relevant ministers to map out a springboard for discussion over child policies by the end of March.

Judging from the time frame, before the local elections in April, Kishida may be able to announce the government's "pork barrel" policies, including boosting cash handout programs, without clarifying how they will be paid for, pundits said.

Hiroshi Shiratori, a political science professor at Hosei University, said Kishida seems to be laying his hopes on child policies to revive the popularity of his cabinet, but the strategy might not work with public concern for increasing levies growing.

Akira Amari, a former economic minister and LDP heavyweight known for his close relationship with Kishida, has hinted the consumption tax rate could be raised for its current 10 percent.

Chief Cabinet Secretary Hirokazu Matsuno, the top government spokesman, and Finance Minister Shunichi Suzuki quickly denied Amari's idea, but speculation about a hike designed to cover child policies has been rife.

Shiratori said opposition parties can "deliver a heavy blow" to Kishida if they successfully attack his administration over potential tax hikes during the regular Diet session.

Many economists have pointed out that Kishida should first try to seriously review government expenditure in order to squeeze financial resources to improve Japan's child policies, before considering tax hikes.

Shunsuke Kobayashi, chief economist at Mizuho Securities Co., said it is "meaningless" to increase the tax burden on younger people who are rearing children to provide support to them.

Kobayashi said the Kishida administration should cut ballooning spending on countering the novel coronavirus pandemic, such as subsidies for hospitals that accommodate COVID-19 patients, to ensure there is something in the budget for children.

© KYODO

©2023 GPlusMedia Inc.

75 Comments
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Yesterday: it's now or never to curb declining birthrates.

Today: We want to raise sales taxes, woohoo!

Brilliant

32 ( +47 / -15 )

Price already increases and there will be another tax increase, while people salary still flat.

https://japantoday.com/category/business/japan-wage-talks-begin-with-unions-business-agreeing-raises-needed

11 ( +29 / -18 )

A crucial issue cropped up at Japan's regular Diet session that convened Monday -- whether Prime Minister Fumio Kishida will look to hike the politically unpopular consumption tax to cover the child policies he is trying to advance.

The LDP are cheap hacks bereft of good policy ideas and their goto scam is the bait and switch.

At first it was all about raising corporate taxes to fund pandemic shortfalls and the defense buildup.

After some pushback by business leaders they are floating, considering, eyeing , mulling a regressive consumption tax increase.

It is highly likely that was the objective all along.

Kishida has said his child policies will concentrate on three fields -- strengthening economic support centering on bigger child benefits, expanding services for families raising children and promoting reforms on work style and childcare leave.

And the rationale will not be for more weapons or corporate welfare, the LDP will go for the oldest one in the book.

"It's for the children."

14 ( +34 / -20 )

What a brilliant idea from these brilliant people running this country.

-6 ( +17 / -23 )

opardizing his cherished goal of hosting the Group of Seven summit in May in his home constituency of Hiroshima,

As a PM hosting the G7 is not a national priority, the high child poverty, the disastrous drop in birth rates. The continued stagnation of wages, inflation that has people choosing between heating or food. Think as a PM he should be focusing on lifting the surfs out of the straw houses into mud brick houses.

7 ( +21 / -14 )

Raise taxes again?!

20 ( +25 / -5 )

What the heck has happened to the tax revenue that was gained by the last hike from 8% to 10%? It was specifically earmarked for the very things he is discussing now, to support parents and children.

Why hasn't any politician, LDP or opposition demanded an answer on this?

39 ( +42 / -3 )

The price of food in Japan is already a problem for many.

Raising tax on food is extremely unfair to the less affluent.

Having children will only be for the rich or for those willing to pare down their budgets to the minimum.

Expect the birth rate to plummet and new births to become a rarity

15 ( +38 / -23 )

Because paying more taxes is a great incentive to having more children...

Or was that yesterday's problem?

31 ( +38 / -7 )

They have no where to go, growth rate close to 0 birth rate negative pensioners outperforming workforce no help from foreigners that are very few due to the high barriers of entrance. Japan inability to see the bigger picture in advance is like the frog that couldn’t feel the water becoming hot and now is too late to jump out and is boiling to death in the pot.

Japan is in a vicious spiral for which not increasing tax will be almost impossible and stop printing money would mean the total collapse of the Japanese social and economic system not to mention the contagious consequences globally!

Go and increase consumption tax Japan put the final nail in the coffin and have a nice trip!

-9 ( +20 / -29 )

The main reason for Japan’s declining birth rate is that people in their 20s and 30s, those in childbearing age, aren’t earning enough money and can’t afford to get married and start a family. Doubling children-related budget won’t help much.

27 ( +32 / -5 )

It will be a mistake to increase taxes at this time.

25 ( +27 / -2 )

So yesterdays announcement was just a preparation for today. The real intention was to rise tax consumption. Family topic was just to try justify it.

2 things I see:

(1) If the asking for a way to recollect more money, it means that numbers are not working well. Government will have money issues.

(2) Lack of births is really a problem but they still don't take it to seriously, as they use it as pretext for other things.

An increase of taxes will just decrease the budget of most of the citizens. Families with children, usually with a limited budget, will specially feel this. Quite contradictory.....with yesterday's message....

15 ( +21 / -6 )

@kurisupisu Food items in grocery stores are not taxed in the USA. I find it hard to understand how taxing food is justified by Japan's tax code.

14 ( +15 / -1 )

They a useless bunch of old fools the LDP.

-3 ( +13 / -16 )

quote: What the heck has happened to the tax revenue that was gained by the last hike from 8% to 10%.

Soaring inflation, a declining Yen and pandemic costs may have eaten it up. Losing the tourist economy also took a huge slice out of the pie (especially as it was money that was coming in from outside Japan).

Just like the rest of us, Governments pay for things (often priced on markets in USD) and service debt.

If you undermine the global economy with ideologically-motivated policies, inflation will rise, interest rates will rise, prices and costs will rise, and the amount you can squeeze from your citizens will decline. One inevitable consequence is that the birth rate will go down. Not just in Japan but pretty much everywhere, as kids are expensive and finances are only going to get tighter for the majority.

The low inflation/deflationary economy with low interest rates and low-cost, globalised supply chains may not have been perfect, but it was a whole lot better than what we have now. And things are only going to get worse.

We now have a global inflationary spiral, turbo-charging financial harm, poverty and economic damage. I'm not convinced that our Glorious Leaders thought this through.

8 ( +13 / -5 )

What about to raise taxes on super rich and to cut salary of dinosaur politicians especially those sleeping in local and national assemblies ?!?!

17 ( +19 / -2 )

Consumption tax hikes have a history of triggering recessions.

14 ( +15 / -1 )

Shunsuke Kobayashi, chief economist at Mizuho Securities Co., said it is "meaningless" to increase the tax burden on younger people who are rearing children to provide support to them.

This!

15 ( +16 / -1 )

I fear the breaking point is near.

Let them eat cake - all over again.

-6 ( +5 / -11 )

But they need more money to defend a resource poor country full of old people and youth living a hand to mouth existence unable to afford a family. Yes is can see why defence is a priority?

-5 ( +11 / -16 )

Bad Idea! (again)

Whenever the LDP is confronted with a problem, they just do the same action that did not work before.

What is the saying about doing the same thing and expecting a different outcome?

It is time that the LDP is voted out of power!

12 ( +14 / -2 )

He's been taking notes from the US Liberals it appears. He wants more children in Japan but in order to do so he wants to send money to parents to pay for childcare. The catch is that he needs to make the everyday items more expensive to pay for the government programs. Viscous loop.

How about lowering taxes to allow people to keep more of their earned money and work to make childcare less expensive on the other side. what a novel idea.

7 ( +13 / -6 )

> @kurisupisu Food items in grocery stores are not taxed in the USA. I find it hard to understand how taxing food is justified by Japan's tax code.

Japan is a country where justification is usually not a prerequisite for screwing the people

-4 ( +11 / -15 )

They can’t just throw money they don’t have at this problem and expect that to solve it.

Young people’s lives for the most part suck in this country. Low wages, crazy working hours, little job security, totally unreasonable social expectations from older generations who wield all decision making power over everything. Its no wonder they aren’t having many kids.

Solving or at least alleviating these problems is what is needed, but doing so is way more difficult than simply throwing a few thousand Yen at parents is.

On the plus side, offering money is at least a step forward for the LDP, whose main policy for many years seemed to be nothing more than yelling at young people to make more kids, then getting into a frothing rage when that didn’t work and deciding that more yelling was called for.

11 ( +13 / -2 )

@Yubaru on point.

I would advocate scrapping 5 yen and 1 yen coins and just round prices up to the nearest 10 yen.

-6 ( +3 / -9 )

The consumption tax will be raised guys I told you that long time ago. Maybe to 15% within few years.

They need to have cash to cover for all that social programs like childcare, free education for Kumiko child or 5000 yen to all elders etc.

Why do you think defense spending is not covered by bonds? Because they are running out of buyers.

-7 ( +4 / -11 )

Yeah sure. go ahead and raise taxes on people when inflation is hitting everyone so hard. Yeah. That makes sense.

-1 ( +8 / -9 )

What about to raise taxes on super rich and to cut salary of dinosaur politicians especially those sleeping in local and national assemblies ?!?!

more liberal logic. There isn’t enough super wealthy in Japan to cover the programs and pensions.

-7 ( +6 / -13 )

We now have a global inflationary spiral, turbo-charging financial harm, poverty and economic damage. I'm not convinced that our Glorious Leaders thought this through.

@GBR48 - the alternative is that they did think this through and this is exactly what they've been wanting.

I've been banging the drum for the merits of the pre-2012 economy for many years. Strong yen, mild deflation, low borrowing costs. When your salary went up, you saw the full benefit because the cost of living didn't rise. You could borrow money for a house and not be swamped by interest. The strong yen meant that energy and material imports weren't expensive. It was a perfectly fine economy as long as you weren't a politician or big-business exporter, and was frankly better for the people than the bubble era was.

Then the LDP decided the serfs weren't being oppressed enough, Abe swept into power in 2012, the yen began dropping as the money printers were turned on, and a decade later we're in the situation we're in, with working people (and younger working people in particular) in a much worse position than they were a decade ago.

6 ( +9 / -3 )

Oh he should ! Mr.Kishida should raise higher consumption tax of Japan for defence build-up. Tell the people, Japan is still living in good old days like 1980s and they will vote your LDP!

-6 ( +3 / -9 )

What they should be doing is lowering “lawmakers” and most definitely Kishida’s salaries and per diems. Or just straight eliminating them from the budget, all together.

They most certainly are a 1000000% waste of tax payers money.

Get them and their useless “efforts” off the table, and Japan will be back in the black within minutes.

2 ( +7 / -5 )

Trying to wrap my head around this. They want to increase our salary by 3% so that they can tax our income higher to fund their defense budget and they also want to increase the consumption tax to fund their child policies which we have yet to hear what they plan to actually do. At this point, it probably wouldn't matter if we all get raises because we'll probably end up where we were. This all sounds like an excuse to try to fund for the debt on all the other failed policies: Abenomask, Olympic debt, Dentsu donations, etc.

The elections can not come any sooner...

9 ( +10 / -1 )

Taxing the food in the mouth of babes is the LDP's tough love approach to raising kids while keeping parents on the hamster wheel of work.

7 ( +11 / -4 )

Need to pay for defence...raise corporate tax ...

Hmmm bit of a backlash ..

Still need money ...

We hiked the consumption tax to 10 % last time promising more child rearing care and support...which didn't do anything coz we spent all of that on COVID measures ...bailing out restaurants and paying hospitals to keep beds open etc ..

Had to spend a lot of cash on Abe's funeral who cares what the plebs say ..

Inflation is up salaries are down or stagnant since 1988..

I know let's increase the consumption tax again and also increase the cost of health care and pensions ...

We are all outta ideas plebs. . .In fact we never had any ideas in the first place!

Yours insincerely,

LDP

-1 ( +10 / -11 )

So. Even if this works according to Kishida's "plan" (if one can even call it a plan), the taxes raised from the suffering working class and middle class parents will be just enough to offer those same parents subsidies to almost cover their increased tax burden. Net effect if he is successful: things get just a little worse.

Taxpayers need to rise up and toss these silver spoon grifters into the gutter where they belong.

8 ( +9 / -1 )

Cut wasteful spending before raising taxes. Blows my mind to see no cares that supplement budgets being used up in Feb / March by constructions companies annually.

8 ( +9 / -1 )

Food items in grocery stores are not taxed in the USA. I find it hard to understand how taxing food is justified by Japan's tax code.

The problem is that here in Japan "essential" food items are difficult to define due to the systematic problem of jacking food prices for grocery items "made in Japan". Also defining what is an "essential" food is net to impossible to define as there are those those consider, example only here, "wagyu" as being essential, and if you tax it as a "luxury" item, it would be considered a discriminatory tax. Same with many fruits and other "made in Japan" items.

Not all "food items" in the US are free from taxes, and taxes vary from state to state as well. Here in Japan, taxes are uniform throughout the country in this regard.

7 ( +8 / -1 )

If the Japanese want a new direction then they need to get off their backsides and vote!

10 ( +12 / -2 )

Prime Minister Fumio Kishida will look to hike the politically unpopular consumption tax to cover the child policies he is trying to advance."

The last increase in sales tax was supposed to be raising funds for social services including child rearing.

Not for the Olympics, pork for J-Inc, more weapons, politico funerals etc etc.

LDP = Lying Dishonest P..s

0 ( +7 / -7 )

Oh we never saw that coming did we!

Sales tax will eventually reach about 20%.

0 ( +10 / -10 )

My proposal to solve the population problem. Increase immigration! That’s it really anything else will just slow the population decline, as inline with all other highly developed industrialized countries.

-1 ( +3 / -4 )

jeopardizing his (Kishida’s) cherished goal of hosting the Group of Seven summit in May in his home constituency of Hiroshima

What is it with the ruling elite and their cherished goals; inevitably destined to end up as yet another uncherished own goal.

-3 ( +3 / -6 )

Cards fanToday  07:11 am JST

Yesterday: it's now or never to curb declining birthrates.

Today: We want to raise sales taxes, woohoo!

Brilliant

Yes.No other words are needed.LDP is bringing Japan to collapse.

-3 ( +5 / -8 )

@Abe234

I used to think that way, but the latest data shows the turmoil countries are facing when allowing immigration to run rampant. Nothing wrong with immigration, it just needs to be regulated with an easy to follow rulebook and there currently isn't a good answer to how one country can do this without negatively affecting their current system.

https://www.usnews.com/news/best-countries/articles/2022-12-30/sweden-once-welcoming-to-immigrants-shifts-course

https://www.aa.com.tr/en/europe/germany-needs-to-reform-its-immigration-laws-expert/2775908

6 ( +7 / -1 )

There isn’t enough super wealthy in Japan to cover the programs and pensions.

There is one fool, the one that said "I choose to go to the Moon!"

7 ( +8 / -1 )

his cherished goal of hosting the Group of Seven summit in May in his home constituency of Hiroshima

Yeah, if I were the leader of a country, I think I would have higher ambitions than to hold a talk and photo fest

5 ( +7 / -2 )

Any country that continues to print money out of thin air to continue on spending sprees, particularly defense or protection, will eventually resort to continue raising taxes and coming up with all kinds of revenue-generating schemes. Story of most of Europe, US, Canada, New Zealand, and so forth.

0 ( +3 / -3 )

Not affected. I can’t afford the higher price beforehand, so I logically also can’t afford an even higher consumption tax on those higher prices. He can raise it to 500% if he wants, and still gets less than before.

5 ( +5 / -0 )

consumption tax

No we can't eat tax !

And yet our diet is all tax !

Next he will tax the air we breath and to use the toilet

-2 ( +4 / -6 )

Kishida. This guy has lost his mind.

Squeze the people just appease and fund your suzerain, the US.

-2 ( +7 / -9 )

Do you know how much money he spent on Abe's memorial service last autumn? A deceased person worth more than a billion yen.

Now he need to raise taxes for defence build-up, for Mr.Kishida, the above made sense!

4 ( +8 / -4 )

My proposal to solve the population problem. Increase immigration! That’s it really anything else will just slow the population decline, as inline with all other highly developed industrialized countries.

Yes exactly !

However they think thier bloodline is pure so superiority won't allow increased immigration.

Mostly han /mongol anyway

-15 ( +6 / -21 )

Cough up, plebs! Those expensive weapons systems from the US don't pay for themselves you know.

-7 ( +8 / -15 )

After electing the LDP for over 50 years, the Japanese people truly deserve what they get, not quick on the uptake.

-14 ( +9 / -23 )

Japan is beyond hopeless.

https://mainichi.jp/english/articles/20230123/p2g/00m/0na/011000c

Only 16% of 17 to 19-yr-olds in Japan certain they will marry: survey

TOKYO (Kyodo) -- Only 16.5 percent of teenagers aged 17 to 19 in Japan believe they will definitely marry in the future, with others citing psychological and financial concerns in tying the knot, a recent survey by a philanthropic organization showed.

-15 ( +5 / -20 )

I've got a better idea.

Let's make the entire workforce hakenshain. That way we can make sure no woman can take maternity after birth, forcing them to become a stay home mom. And dads wouldn't even dare thinking about paternity. Everyone in yearly contracts will surely give them better job security.

Then raise the city/prefectural taxes by 7 to 10%, followed by a sales tax hike to 20%.

These will surely motivate people to have kids...

This is the logic of politicians in power.

Reminds me of the time the reduced the number of trains per hour to decrease the amount of people per train during the pandemic. Rich politicians in zero contact with reality.

Rant over.

4 ( +10 / -6 )

The elections can not come any sooner...

Pray tell, what will happen differently with an election? The LDP might loose a few seats but to the people voting their "rep" does no wrong!

AND dont forget that before every election the PM will make some gesture to the electorate that makes them feel good about voting for the LDP

5 ( +10 / -5 )

I knew it. The politicians bow to big business only.

6 ( +8 / -2 )

Vote LDP

Consumption tax to rise to 20%.

Pledge for salary increase.

Print money.

Pledge for higher birth rate.

Protect Japan from China/Russia.

Print more money.

Limit working hours to 100 per month.

Vote LDP.

Renew your temporary contract.

Manage earthquake.

Pledge for better treatment for women.

Print money.

Obtain Olympic games

Reject Korean request compensation

Pledge for special internship program for immigrants.

Vote LDP.

Print more money

Work more

Pay more

Get taxed more.

Smile more.

A Japanese "wonderful" life.

-5 ( +10 / -15 )

How out of touch with what's happening on the ground with normal Japanese can he be?

8 ( +10 / -2 )

Time to take to the streets and let them know....

5 ( +8 / -3 )

Time to take to the streets and let them know....

Yeah, what do you think this is...some kind of "advanced democracy or something?

-7 ( +7 / -14 )

Yesterday: Scare people with talk of collapse

Today: lay the groundwork for raising consumption tax

Tomorrow: Do the same for raising pension age to 70

5 ( +8 / -3 )

Uncertainty over the cost of living, i.e., telling them "taxes on everything are going up" is probably the biggest discouragement you can give to people thinking of starting a family.

How about lowering taxes to allow people to keep more of their earned money and work to make childcare less expensive on the other side. what a novel idea.

Childcare for babies is hideously expensive due to necessary staffing levels. Cut them and you'll have more accidents and deaths at childcare facilities. The cheapest (and I am certain, greatest net happiness) approach is to pay people a bit of money to look after their own children at home. Give everyone with an under three 50,000 yen extra child benefit, and raise the public childcare cost by 50,000. Some people currently using childcare will only be coming out 50,000 yen ahead by working, and would instead choose to raise the child. Many women want to be Stay at Home mothers. Why not subsidize them to do this? Why is it necessary for them to work to get help from the state?

4 ( +6 / -2 )

Hang on there is birth rate issue in Japan because it's unaffordable for many to start a family and now an intention to increase tax which means living costs are going to be higher. The ideas of running the economy seem to be all over the place.

7 ( +7 / -0 )

Yep increase pay 3% to put you in a tax bracket where nearly all your increase is taken by the higher tax bracket.

then increase consumption tax to 12 or 15%. then wonder why no one is having babies or buying anything.

8 ( +12 / -4 )

The general public are more likely to starve to death in their cold houses than speak out against their overlords. There is no political opposition to vote for. Another three decades of stagnation please sir.

-7 ( +5 / -12 )

The general public are more likely to starve to death in their cold houses than speak out against their overlords. There is no political opposition to vote for. Another three decades of stagnation please sir.

Yep!

-10 ( +3 / -13 )

How is increasing the cost of living going to help already overstretched families? You help them by reducing costs not increasing them..

3 ( +3 / -0 )

We want young people to have more babies. However, first we have to tax them more.

You couldn't make this sh it up!

3 ( +3 / -0 )

@Awa no Gaijin LMFAO you already pay for that!!! Air Quality Management through your prefecture government and you also pay for waster water every flush especially if it goes in to a septic tank you pay for it!!

Next he will tax the air we breath and to use the toilet

0 ( +0 / -0 )

@Ego Sum Lux Mundi Cough cough nothing is free!!! The US is not the only place Japan procure weapons they are also made domestically. Time for some Nyquil!!!

Cough up, plebs! Those expensive weapons systems from the US don't pay for themselves you know.

0 ( +0 / -0 )

LDP elites love destroying Japan before the eventual war in Taiwan.

-2 ( +1 / -3 )

For the life of me I can’t understand how you can ask ppl to have kids but speak of raising the tax on food in the same breath. Are you really that oblivious to reality?

0 ( +0 / -0 )

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