In the lead-up to Japan’s general election, opposition parties are proposing to cut or eliminate the consumption tax to appeal to voters facing price hikes, but experts warn that these measures may worsen Japan’s already fragile fiscal health. The ruling and main opposition parties emphasize the importance of the tax revenue for social security and public services.
While some politicians advocate for tax reductions, others, like Prime Minister Shigeru Ishiba, stress the necessity of maintaining the current tax rate. Real wages in Japan have been on a decline, exacerbating the impact of rising prices on consumers.
Despite calls for tax cuts from parties like Reiwa Shinsengumi and Japan Innovation Party, economists caution that reducing the consumption tax could have adverse effects on the economy. Ishiba and opposition leader Yoshihiko Noda argue that tax revenues are crucial for funding essential services.
The decision to raise the consumption tax in stages was made under Noda’s tenure as prime minister, with Abe implementing the hikes in subsequent years. Critics like Taro Yamamoto blame tax increases for economic downturns and advocate for lower taxes to stimulate domestic demand.
While some analysts urge caution in reducing the consumption tax, business groups emphasize the need for a sound financial structure to maintain Japan’s global competitiveness.
© KYODO