Struggling with his lowest approval ratings since taking office, Japanese Prime Minister Fumio Kishida is considering temporary tax reductions, the Nikkei newspaper reported, days ahead of two special elections.
The premier is set to announce in a policy speech to parliament on Monday that he’s ordering his ruling Liberal Democratic Party’s tax panel to discuss the idea, the paper said, citing a draft of the address. Income tax is likely to be among the targets considered, the paper said.
The LDP’s ruling coalition partner, the Komeito party, backs the idea.
“We absolutely want to ask for reductions in income tax,” Yosuke Takagi, policy chief in the Komeito, told reporters in Tokyo on Tuesday, saying he had raised the matter in a meeting with Kishida. The premier later told reporters that he was aiming to take “bold steps” to help people deal with rising prices.
While Kishida need not hold a general election until 2025, his unpopularity could mean he struggles to keep his position in a party leadership vote in less than a year. Data show real wages have fallen since he won office two years ago pledging to improve incomes. Tax cuts would also come on the heels of Kishida’s attempts to win approval by distancing his party from a controversial religious group.
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Voters don’t think he’s done enough to help them cope with unaccustomed inflation after years of falling prices, surveys show, despite the fact he’s expanded and extended subsidies on gasoline and household power. Inflation has been higher than the Bank of Japan’s 2% target for 17 months.
Even amid rising government revenues, tax cuts for individuals have been a divisive issue as deeply indebted Japan seeks ways to pay for its biggest defense expansion since World War II. Kishida had previously said he was planning to expand tax benefits for companies that raise salaries in an economic package to be unveiled by the end of the month. A poll by public broadcaster NHK this month found three quarters of respondents said they were uneasy about Japan’s fiscal situation.
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“People will be happy if there’s a tax cut, but it’s a short-term benefit,” said Yu Uchiyama, a professor of politics at the University of Tokyo, while warning that he still expects tax hikes in the long-term. “It’s odd to talk about excess revenues when the country is this much in debt.”
Kishida’s party also looks likely to step up measures against the South Korean-based church whose activities were cited as motivating the man accused of assassinating former Prime Minister Shinzo Abe.
Cabinet support has gained little from a popular move to seek the dissolution of the group formerly known as the Unification Church, which has a list of court judgments against it over its fund-raising methods. The church has long-standing ties with the LDP.
Party upper house Secretary General Hiroshige Seko told reporters Tuesday the LDP would discuss the idea of legislation enabling the government to freeze the group’s assets in order to secure funds to compensate victims, NHK reported.
--With assistance from Ryotaro Nakamaru and Takashi Hirokawa.
(Updates with analyst comment in seventh paragraph.)