Prime Minister Sanae Takaichi will pledge to speed up discussions on a two-year suspension of the 8 percent consumption tax on food and beverage items in her policy speech at the upcoming special parliamentary session, a government source said Tuesday.
At the policy address slated for Friday, Takaichi is expected to say she aims to draw an interim conclusion before the summer on whether and how to implement the tax break plan at a cross-party "national council" and swiftly submit related bills, the source said, citing a draft of the speech.
To realize her "responsible yet aggressive" fiscal policies, Takaichi will vow to ensure market confidence by showing Japan's financial sustainability and present a roadmap to encourage public and private investment in March as part of the government's growth strategy, according to the source.
Takaichi's speech comes after her Liberal Democratic Party achieved a crushing victory in the House of Representatives election on Feb. 8 by gaining more than two-thirds of the lower chamber's 465 seats, and its coalition with the Japan Innovation Party secured three-quarters of the seats.
In the election, almost all parties campaigned on suspending or abolishing the consumption tax on food as a measure to counter prolonged inflation. The LDP, however, made a less binding promise, saying it will "accelerate consideration" for a two-year tax suspension on food and beverage products.
Before the official campaigning for the lower house race started on Jan 27, Takaichi, who took office in October, said in a TV program that she aims to carry out the plan to suspend consumption tax on food in the next fiscal year, which begins in April.
If the national council reaches an interim conclusion by summer, Takaichi's cabinet may submit related bills, at the earliest, in an extra Diet session that could possibly be convened in the fall.
In her speech, Takaichi is set to explain the government's plans to introduce a mix of income tax deductions and cash handouts to households, and until this envisioned system is introduced, the government will suspend consumption tax on food, the source said.
Amid concerns over Japan's fiscal health with its public debt over twice the size of its gross domestic product, Takaichi will also stress that the government will not rely on the issuance of deficit-covering bonds to make up for the revenue loss while lowering the debt-to-GDP proportion, according to the source.
Taking account of planned anti-espionage legislation, Takaichi will renew her commitment to steps to prevent "unjustifiable foreign interference" by boosting intelligence capabilities and set up a national intelligence committee chaired by her, the source said.
On the diplomatic front, Takaichi will advocate updating the "free and open" Indo-Pacific vision and emphasize the importance of collaboration with like-minded nations to reinforce critical material supply chains, apparently with China's growing military and economic clout in the region in mind, the source added.
The 150-day special parliamentary session is scheduled to be convened on Wednesday, when Takaichi is almost certain to be reelected as prime minister.
© KYODO
26 Comments
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fluffy_canyons
The suspension on food tax is a good idea because it will be so politically devastating to re-enact that once it’s abolished it will never be reinstated. It will also bring into question the whole consumption tax idea. Do it.
Ebisugaoka
No no, not whether. You campaigned on this. People voted for you for this. Don’t get your disappointments in this early now.
diagonalslip
that's what I like to hear... concise and definitive statements from politicians... （⌒▽⌒）
MichaelBukakis
Finally giving poor workers some slack!
Aly Rustom
That's an excellent point!
shogun36
They’re “making the plan now?”
so there never actually was a plan to begin with, just words?
shocker……..
let me guess, this “tax cut” will keep getting “postponed” till every one is supposed to forget it was an actual thing?
Namorada
Let’s say the government does manage to keep their promise, what is going to stop companies from raising their prices as the yen continues to weaken? By the end of the two years, that 8% “savings” at the register will have easily evaporated. Greedflation and Shrinkflation have already taken hold in some sectors. I just don’t see the 8% having any lasting impact. Additionally, with everything still in the “planning” stage, this definitely gives companies a chance to make sure their price hikes go into effect just in time to make any 8% reduction look like prices went down.
I would rather hear more talk and plans regarding ways to get wages to rise at SMEs and quickly through a process of carrots and sticks than all this time spent on 8% on food.
OssanAmerica
Market forces. Companies must price to beat,or at least match, their competition.
That 8% tax was never a profit to the companies, it went to the government. The temporary elimination of that tax has no effect on company profitability. If a company chose to increase their prices they risk ovrepricing their product against the competition and losing sales.
The weak JYen is not relevant to the issue of consumption tax.
Zeta
She keep saying the hit IS not going to be cover by debt. Also there IS a 500 billion investment in your beloved Trump world...
Still...she dont say from where the Money ia going to be taken...
I expect a raise in shotokuzei very soon after...
nickybutt
So we will pay no tax on food, great. Where are they going to increase the tax to cover this?
wanderlust
They'll have a meeting to discuss the agenda for a meeting to consider a plan to propose reducing tax at a time to be considered at an implementation meeting in the future for submission, discussion and approval.
Speedy action J-Style!
ian
She has not even made the vow yet on the "speedy" discussion.
SarcasmOnly
Another day, and another vow/pledge by a Japan government official.
Will_Rendle
NamoradaToday 08:24 am JST
A lot of the SMEs just aren't making any money. If they don't merge with or get acquired by other companies they should close down. They shouldn't be allowed to survive on subsidies and low-interest loans. I think a lot of SME owners are useful LDP supporters though so I don't expect much discussion on that.
mynihon23
Even if implemented, given the timelines to take decision, it seems scrapping food tax may only happen from Oct 2026 or in worst case from April 2027.
Aoi Azuuri
Japan's present PM suddenly begun to insist to scrap food-tax "personal dearest wish" from immediate before her selfish election.
But, one journalist who analyzed her blog revealed that her "dearest-wish" is just lie.
https://president.jp/articles/-/109156?page=1
And, Japanese PM's blog were suddenly deleted.
Japan's present PM is deceptive person who always escapes or conceals about inconvenient facts.
kohakuebisu
Food prices have gone up a lot but I don't think Japanese companies are especially bad for this. The fact that many price rises are announced on the same day shows an unwillingness to raise prices and to delay rises until inevitable. The story yesterday about US beef said it had gone up from 5000 yen a kilo to 11000 a kilo in the US (using a constant exchange rate). Meat has gone up a lot in Japan in the past five years, we're a family of five so we notice, but it hasn't doubled. Rice has doubled but that is a s$&%show related to how agriculture works in Japan and how rice is treated within it.
kohakuebisu
It'll be delayed, probably as long as they think they can get away with. There was originally no intention to do it, and its essentially them stealing the opposition's star policy to win the election.
Namorada
@ossan, companies have been absorbing costs for quite some time and it is unlikely they’re going to let the opportunity to keep more money. As was stated above, if the tax goes down it’ll be harder to get it to go back up. Likewise, it’s hard enough to get prices to rise, so I hardly see companies not using the consumption tax reduction as a chance to get higher returns in whatever way they see fit.
As for the consumption tax not impacting the yen, I’d argue that the BOJ sees that as lost revenue that needs to be made up through debt spending or what not given Japan’s fiscal situation which does impact the yen.
In any case, my point is that the consumption tax reduction is going to be short lived at best. A family of four would save 60,000 a year assuming there is no more inflation or yen weakness of any kind. That is not the situation and inflation among other things will eat away most of those savings within a year or so. So it is meaningless.
Giving those with less would have a greater impact on the economy. Helping SMEs raise wages would have a greater impact.
Getting rid of the 8% tax will do nearly nothing.
toto_kiboko
If you calculate the temporary cut of 8% consumer tax on food over only a period of 2 years, it amounts to a drop in the ocean if you compare how heavy the burden of income and residential taxes. It would have been such a wonderful gesture to reduce income tax on all categories no matter how small on a lasting basis.
okinawarides
The suspension on food tax is a good idea because it will be so politically devastating to re-enact that once it’s abolished it will never be reinstated.
Japanese public sure hopes so.
ian
Implementing measures to restore rice prices to early 2023 prices would have way more impact
shogun36
Will this happen before or after the minimum wage "rises" to 1500 yen "by the year 2030?"
Oh wait...................we are not supposed to remember that "vow" made by the LDP.
Ooooops.
Anpanman76
How naïve the voters are. Even if they really lower the consumption tax, the government will inevitably make up the lost revenue by raising other taxes accordingly. Japan desperately needs tax income. It’s just a smokescreen. Moreover, food producers will now feel justified in increasing the prices of their products.
ian
Even if that's the case , still good that necessities are untaxed
proxy
This policy is both populist and poor public policy. Prove me wrong.