Trivial Discussion over Tax Relief

Two leading parties, Liberal Democratic Party and Komeito, confronted each other over consumption tax relief. Representing the interest of Ministry of Finance, LDP insisted on saving the income of national budget as much as possible. Komeito demanded consumption tax rate of daily foods to be as broad as possible, in order to maintain political support from low-income families. Discussion over consumption tax hike in 2017 is getting too trivial to address financial crisis brought by huge amount of national debt, mainly accumulated by economic policy of past LDP administrations.

Prime Minister Shinzo Abe ordered the leaders of LDP to discuss consumption tax relief from a viewpoint of “achieving stable resource within the framework of integrated reform of social security and tax.” LDP Secretary General, Sadakazu Tanigaki, interpreted Abe’s words as containing the amount of fiscal resource for tax relief within ¥400 billion, which would be secured by the integrated reform. In Tanigaki’s concept, the tax relief will be limited to fresh vegetable, fish and meat, including cut vegetable, sashimi or minced meat.

Komeito strongly opposed Tanigaki, requiring broader support for the life of low-income families. Adding to fresh foods, Komeito demanded fax relief on processed foods including milk, noodles, juice or cake. Komeito interpreted Abe’s order not limiting the resource with actual amount of money. “It should be determined with comprehensive view over national budget,” told President of Komeito, Natsuo Yamaguchi, fundamentally opposing Abe’s policy of limiting resource for tax relief. Yamaguchi requested to include the food in restaurants and drinks without alcohol.

In spite of having membership of LDP, Chief Cabinet Secretary, Yoshihide Suga, supported the appeal from Komeito. “I did not understand the order of Prime Minister as limited within the integrated reform. I don’t think he offered a concrete idea,” told Suga in his press conference. Hoping firm support from Komeito in the election of House of Councillors next summer, Suga stood by Komeito, rather than uncontrollable MOF.

The discussion has been about whether the national budget can spend ¥400 billion or not. Meanwhile, the total amount of national debt of Japan is ¥1 quadrillion. While consumption tax rate had to be reducing that huge amount of debt, Japanese politics is focusing on scooping votes from low-income people or securing cooperation from friend party in the election. They have to discuss how to reduce governmental spending, sustainable economic growth not dependent on unusually ambitious economic policies or trickling down the profit accumulated in the budget of major corporations.