Prime Minister Shigeru Ishiba on Wednesday rejected a proposal by a major opposition party to remove the consumption tax on food items for one year, aimed at cushioning the impact of inflation and higher U.S. tariffs.
Amid calls to reduce tax burdens, including from within the ruling coalition, Ishiba said he will "examine in detail" proposals from other parties, including one from the Komeito party, the junior coalition partner of his Liberal Democratic Party.
The major opposition, the Constitutional Democratic Party of Japan, said last week that it is pushing to scrap the consumption tax on food items for one year.
The decision was made under CDPJ chief Yoshihiko Noda, who served as prime minister from 2011 to 2012 and laid the groundwork for tax hikes to address rising social security costs. Ahead of this summer's House of Councillors election, Komeito is not ruling out a reduction in the consumption tax on food items.
"If we go with a one-year consumption tax cut, this raises the questions of whether it is feasible for business owners to adjust their systems twice in such a short period, and how the required costs will be shouldered," Ishiba told reporters during his visit to the Philippine capital of Manila.
While low-income households should receive the most assistance in riding out the ongoing cost of living crisis, a tax cut for food items would be universal, benefiting high-income earners, he said.
Ishiba has expressed caution about reducing the consumption tax rate. He ruled out drawing up new economic measures "at this point," following the government's announcement last week of subsidies to lower utility costs and gasoline prices.
Japan's consumption tax is set at 10 percent, though the rate for food and beverages is set at 8 percent.
Japan has one of the world's fastest-aging societies and the worst fiscal health among developed nations. The most recent consumption tax hike came in 2019.
After the country's Golden Week holiday period ends in early May, the LDP and Komeito are scheduled to begin discussions on tax cuts and other measures that could go into a new economic package to be compiled around June.
© KYODO
11 Comments
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kurisupisu
Is Ishiba for the majority of Japanese people or not?
Cutting tax on food is a no brainer!
His straw man points such as :
"If we go with a one-year consumption tax cut, this raises the questions of whether it is feasible for business owners to adjust their systems twice in such a short period, and how the required costs will be shouldered,"
Why isn’t he concerned when the price of food rises (and tax) and millions of us have to spend more just to survive? What sort of nonsensical false logic is his comment based on?
And what sort of confused mind set is the following comment based on?
a tax cut for food items would be universal, benefiting high-income earners, he said.
Do the wealthier Japanese eat twice as much as the poor if food is cheaper?
Even if the did then so what!
Will they clear the stores out of Kobe beef?
I sincerely thought Ishiba was going to be a tad different from the rest of the clone like previous PMs but alas, it’s not the case.
Saltwater Shenanigans
Stop voting in LDP. They only serve big businesses and are way out of touch with the modern world.
BertieWooster
Of course Ishiba would be against lowering taxes. If they lowered taxes, where would the money come from for all the kickbacks?
kurisupisu
Is Ishiba so out of touch with ‘democratic principles’ that he doesn’t know what the electorate need?
His opinions are irrelevant!
Let’s have a referendum then?
Put it to theJapanese people!
Ask the Japanese people the simple question.
Cheaper food, yes or no?
kurisupisu
Is Japan a Democratic country?
It appears that it needs a lot of work to get there…
HopeSpringsEternal
Japan's Govt. is divided and directionless. Appears that PM Ishiba has no clear ideas or appeal, just another career politicians addicted to 'free lunches' provided by taxpayers
kurisupisu
These career politicians just follow their family members through the system without having worked in a business where monthly income is a fluctuating number.
Make a mistake in business and it has a major impact on investment, workers and future plans.
Of course, Ishiba knows nothing of these stresses.
He does know the life of being chauffeured,waited on and protected-luxuries the average Japanese can only dream of….
ThonTaddeo
Well, yes, it would benefit high-income earners, but it would benefit the working class more, because working folks spend a greater portion of their income on essentials like food. Without food, living things die. Taxing food means forcing people to pay the government just to remain alive. If there's one thing that is absolutely immoral to tax, it's food. And yet the LDP just keeps raising and raising and raising that tax.
Mr Kipling
Do you have any idea how big a hole cutting consumption tax to zero on food would put in the tax revenues? Consumption tax is the governments largest source of revenue. About 24 trillion yen last year or 34%.
How are you going to fill that hole.... ?
Mr Kipling
4 down votes but not a single answer?
So you want to remove consumption tax, fine, but what services are you going to cut or which other taxes are you going to put up. Remember, its 24 trillion yen.
fxgai
Yes but this ignores half of the equation.
The point of taxation is to redistribute, and if we take the money from the high income earners and give it to the "working folks" (or otherwise lower their income taxes) they could benefit far more.
Yes, but someone with zero income needs money to pay for food, either way.
So we have to keep the other side of the equation in view, it's the whole point.
And rich pay will pay a lot of consumption tax on their food...