Prime Minister Shinzo Abe announced on October
1 he will raise the
consumption tax rate from 5 to 8 percent
on April 1 as scheduled. At
the same time, Abe unveiled a \5
trillion stimulus package to offset
some of the immediate negative effects
of the tax hike.
On September 30, the ruling Liberal Democratic
Party and New Komeito
agreed on the final draft of the outline
of taxation reform for the
next fiscal year pillared on (1) a
two-year extension of tax reduction
to the companies which raised wages, (2)
requests to the business
world to raise wages, (3) ending special
corporate tax surcharges for
reconstruction in disaster-hit Tohoku a
year earlier than planned, (4)
tax deduction to the companies which
invested to improve productivity,
and (5) revision (reduction) of
vehicle-weight and vehicle-sales tax.
The economic stimulus package includes a
\10,000 cash allowance for
low earners and various tax cuts
totaling about \1 trillion, including
temporary ones, as well as \730 billion
in tax incentives to encourage
corporate investment. The total amount
of tax reduction will amount to
about 1 trillion yen.
In hammering out the stimulus package, Abe and
the LDP proposed to
end special corporate tax surcharges for
reconstruction in
disaster-hit Tohoku a year earlier than
planned and thereby boost the
broader economy. This step would save
firms a projected \900 billion
in total.
Abe has been sensitive to requests from
foreign investors, and has
repeatedly floated the idea of cutting
the corporate tax to attract
more foreign business investment. But
New Komeito, the LDP’s junior
coalition partner, opposes the idea.
Unable to reach agreement, the
two parties merely agreed Monday to
revisit the proposal by year’s
end.
While Abe and his Cabinet has argued that a
corporate tax cut would
help companies to raise wages, which
would in turn benefit workers.
But Komeito doesn’t buy the notion and an arrangement will likely be
made some time after FY 2015.
On September 30, the Abe Cabinet officially
nominated the new 25 vice
ministers and 27 parliamentary
secretaries while reappointing the
lawmakers engaging in the ongoing
challenges like the post-quake
reconstruction and the Trans-Pacific
Partnership negotiation. Also,
Abe appointed 4 female lawmakers as vice
ministers, increased from the
previous 1, putting into practice the
mobilization of women’s power
which he has repeatedly appealed to the
public.
On September 25, the opposition Democratic
Party of Japan, Your Party,
Communist Party, Social Democratic Party
and People’s Life Party
jointly handed a document to Upper House
President Yamasaki to request
the government to convene the Diet
session earlier than October 15
officially scheduled in order to censure
the government for its slow
response to the radioactive water leaks
at the stricken Fukushima no.1
nuclear complex. The five opposition
parties, according to the
Constitutional provision (Article 53),
gathered signatures of 92 Upper
House lawmakers dominating more than a
quarter of the House (242) to
enforce the Cabinet to convene a Diet
session. Also, Jin Matsubara,
DPJ Chairman of Diet Affairs Committee,
handed the same request to the
Chairmen of Diet Affairs Committee of
LDP and Komeito. Yet, the
Cabinet will likely reject the request
for Abe’s scheduled foreign
visits to attend meetings of APEC and
ASEAN summits.
Abe officially announced to raise the
consumption tax from April 2014
in combination with the \5 trillion
economic stimulus package on
Tuesday. It is to see how the opposition
parties will respond to it
toward the convening of the next
extraordinary Diet session on October 15.
