Japan PM to Instruct Ruling Coalition to Consider Income Tax Cut
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Japan PM to Instruct Ruling Coalition to Consider Income Tax Cut

Prime Minister Fumio Kishida will instruct ruling party executives as early as Friday to consider cutting income tax as a temporary measure to achieve his goal of redistribution, sources with knowledge of the plan said Thursday.

Kishida is seeking to make it a key feature of an upcoming inflation-relief package that his Cabinet now plans to formalize on Nov. 2, the sources said, at a time when his public support has tumbled to a new low.

The ruling Liberal Democratic Party and its junior coalition partner Komeito will hash out details of the package in the coming days, with their focus on how best to return some tax revenues to households reeling in a cost-of-living crisis.

While headline inflation has eased in recent months, consumers have had to pay more for everyday goods. Kishida has urged his Cabinet ministers to use “all policy tools” to mitigate the impact of inflation on households, on top of steps that have already been in place, including subsidies to reduce utility bills.

“We hope to consider the specifics of how we can give something back to the Japanese people as soon as possible,” Kishida told reporters, revealing that he plans to meet Friday with executives from both parties who are in charge of policy coordination and tax reforms.

Kishidia’s public support fell to 32.3 percent in a recent Kyodo News poll, the lowest since he took office in October 2021, with nearly 60 percent of respondents saying that they do not expect much from the new economic package.

The prime minister is widely seen as trying to decide on the best timing to dissolve the House of Representatives for a snap election while seeking to change perceptions among some voters that he is a proponent of higher taxes.

His government has already decided to secure part of a substantial increase in defense spending by raising income tax and others, although the exact timing has yet to be finalized.

Earlier this week, the LDP and Komeito separately submitted a list of items they want included in the economic package.

The LDP once considered reducing income tax as an option but dropped the idea, partly because it would take time for the cut to be implemented and the nation’s fiscal health is in dire straits. Komeito’s requests did not include reducing income tax, but its policy chief asked Kishida to consider it when they met in person.

Ahead of the opening of an extraordinary Diet session on Friday, opposition lawmakers are stepping up their criticism of the latest development, which they see as intended to woo voters as two by-elections are slated for Sunday.

The economic package will consist of five pillars — easing the pain of inflation on households, spurring more wage growth, increasing investment, addressing challenges posed by the nation’s declining population, and securing the safety and security of the Japanese people.

The government is scheduled to craft a supplementary budget for the current fiscal year to next March to fund the new measures and submit it to parliament during the session.

Source : Kyodo News