Politics over Tax Rescheduling

That was the first and possible the last direct debate between Prime Minister Shinzo Abe and the opposite party leaders in this session of the Diet. In the joint meeting of Committee on Fundamental National Policies of both Houses, or Question Time, on Wednesday, President of Democratic Party, Katsuya Okada, requested Abe to delay raising consumption tax rate scheduled in next April. Abe refused revealing his idea, which might be the same as Okada’s. Abe silently tried hard to defend his ailing economic policy called Abenomics.

Okada repeatedly asked Abe whether he would postpone the schedule of consumption tax hike. “I raised consumption tax hike by 3% with a notion that it would be indispensable for passing our world–renowned social security system over next generation. I will not change current policy on next additional 2% as long as fatal event such as Lehman Shock or great earthquake does not happen. With consultation to experts, I will decide appropriately,” replied Abe.

When he dissolved House of Representatives in 2014, with a cause of asking people’s voices on postponing consumption tax hike once scheduled in April 2015, Abe promised there would never be another delay of the schedule. The schedule set was April, 2017. It is obvious that Abe will break his promise, if he announces another rescheduling for it. Since the rescheduling gives the opposite parties a great opportunity for blaming political failure, Okada recommended Abe to postpone the tax hike, even if it would contradict the policy of Democratic Party.

Meanwhile, Okada laid four conditions for rescheduling: raising consumption tax rate to 10% in April, 2019, without changing the goal of achieving primary fiscal balance by 2020; governmental and financial reform; improved social security with supporting measures for low-income families; and retreat from introduction of tax relief. Those were the materials for Okada to criticize the failure of Abenomics, when Abe decides the rescheduling.

The schedule of consumption tax hike closely connected with political strategy of Abe. It is regarded in Nagatacho, the place the Diet and P.M. Official Residence are, that the rescheduling will give Abe a cause for asking people’s voice on his decision again. Although it included an element of leap year, gross domestic products in first quarter of this year marked annual 1.7%. Supporting rate of Abe Cabinet maintains certain stability. But, it is inevitable that Japanese public criticizes absence of politics in the time of many people in Kumamoto still evacuating after consecutive earthquake. Considering all those conditions, Abe will make final decision after Group 7 Summit later this month.