Lower House Budget Committee: Diet Should Examine Effectiveness, Impact of Proposed Tax Cuts

Editorial

17:09 JST, October 28, 2023

The government has not given a clear answer on what impact temporary tax cuts and benefits will have on the economy and public finances. Prime Minister Fumio Kishida must be thorough in answering questions from the people.

The House of Representatives Budget Committee has begun question-and-answer sessions, in which economic measures, which the government will soon compile, have become a point of contention.

When Koichi Hagiuda, chairperson of the ruling Liberal Democratic Party’s Policy Research Council, asked why taxes should be cut, Kishida said the government will return to the people a portion of increased tax revenues in the form of a reduction of income and residential taxes to help them hang on amid rising prices.

The government intends to cut income and residential taxes by the fixed amount of ¥40,000 per person. It is considering providing households exempt from the residential tax with a benefit of ¥70,000 per household.

As higher prices have increased the perceived burden on the public, the government’s aim of supporting low-income earners is understandable. However, if taxes are cut because tax revenues increase, the national debt, which has exceeded ¥1 quadrillion, will not fall no matter how much time passes.

Akira Nagatsuma, chairperson of the main opposition Constitutional Democratic Party of Japan’s Policy Research Committee, said the government plan is “unfair as it mixes tax cuts for individuals with benefits for households.”

Under the currently envisaged system, a family of four, for example, is expected to see their taxes reduced by ¥160,000 as dependents are also covered by the tax cuts. However, the benefits will be paid per household, so a household is expected to receive ¥70,000 regardless of the number of family members.

In light of this, the prime minister has indicated that the planned system might be reviewed, saying, “I’ve given instructions that efforts be made to prevent unfairness [in the system].”

Such a lack of clarity may have arisen from Kishida’s “tax cuts first” stance. One cannot help but see this as Kishida feeling pressured by criticism toward him about tax hikes.

The Kishida Cabinet had until now been trying to secure financial resources for measures to strengthen the nation’s defense capabilities as well as to address the low birth rate. However, with debate on tax cuts gaining momentum, discussions on measures to deal with the low birth rate and other key issues have stalled.

Both the strengthening of defense capabilities and measures against the low birth rate are pressing issues that must be tackled immediately. It is disappointing that the discussions have not progressed even though there is a need to work out specific details, such as how the financial burden should be borne.

The budget committee also has discussed measures to help victims of the Unification Church, formally known as the Family Federation for World Peace and Unification. The religious group is said to have possibly transferred its assets overseas and to other entities to avoid having to compensate victims.

The CDPJ and Nippon Ishin (Japan Innovation Party) have each submitted a bill that will allow a court to order the preservation of assets once a request for an order to dissolve a religious corporation has been made. The ruling parties have also begun working-level discussions on the matter.

Serious consideration must be given to what can be done to help victims of the Unification Church by taking into account freedom of religion and property rights, which are both guaranteed by the Constitution.

(From The Yomiuri Shimbun, Oct. 28, 2023)