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Yomiuri Shimbun file photo Prime Minister Fumio Kishida, right, receives a proposal on comprehensive economic measures from Koichi Hagiuda, chairperson of the LDP’s Policy Research Council at the Prime Minister’s Office in October 2022.
The Yomiuri Shimbun
15:44 JST, December 31, 2022
Prime Minister Fumio Kishida’s recent reference to a House of Representatives election to be held before intended tax hikes has created a stir within the ruling Liberal Democratic Party.
His remark caused speculation to spread within the party that he would dissolve the lower house to hold a general election in 2023. Officials close to Kishida have been frantically trying to quell the uproar, as they want to avoid narrowing Kishida’s options for dissolving the lower house, which is “the exclusive prerogative” of the prime minister.
Change of course
Kishida’s remark was made on a BS-TBS television program that aired on Tuesday. In connection with the tax hikes to accompany an increase in defense spending, he said, “The timing when we [the government] will ask the people to bear the burden [of tax hikes] will be ‘at an appropriate time in 2024 or later,’ which will be sometime by 2027. The starting date will be decided after now, but I think there will be an election before then.”
The outline of tax system reforms adopted by the ruling coalition parties of the LDP and Komeito on Dec. 16 clearly states that corporate, income and tobacco taxes will be raised in stages “at an appropriate time in 2024 or later,” to secure a total of over ¥1 trillion in fiscal 2027.
The terms of current members of the House of Representatives are to expire in October 2025, but Kishida’s remarks were taken to mean that he might dissolve the lower house as early as in 2023 if the taxes are raised in 2024, the earliest possible year.
However, a source close to Kishida offered an explanation, saying, “He merely referred, in a general way, to a lower house election to be held before the expiration of the current members’ terms.”
Within the ruling parties, there is a view that a full-fledged tax hike will be carried out in 2025 or later, and a senior party official also stated, “Even if he were to dissolve the lower house over the tax hike, 2023 is too early.”
Kishida instructed a change of course, and a senior government official gathered reporters at the Prime Minister’s Office on Wednesday in an attempt to calm the stir, saying, “He merely said that an election before the tax hike could be a possibility as the schedule permits.”
Deputy Chief Cabinet Secretary Seiji Kihara also emphasized in a TV program on Wednesday: “When making a major decision, we may ask the public to make a judgment beforehand, or [an election] may happen after such a decision is made. It is up to the prime minister to judge.”
Gaining support
The ongoing uproar was initially triggered by a comment by Koichi Hagiuda, chairperson of the LDP’s Policy Research Council and a member of the Abe faction who is cautious about the tax hikes, on a TV program on Dec. 25.
“We didn’t make any promise of raising taxes during the House of Councillors election held in July. When a clear course of action is set, it would naturally become necessary for us to ask the people to make a judgment,” Hagiuda said, thus calling for the dissolution of the lower house before any tax hike.
Chief Cabinet Secretary Hirokazu Matsuno hit back at Hagiuda’s remarks at a press conference the following day, saying, “We have been saying, since the ordinary Diet session [convened in January 2022], that we would decide on the details of strengthening the nation’s defense capabilities, the budget, and financial resources at the end of the year.”
In connection with Kishida’s tax hike policy, other members of the Abe faction also raised objections, including Hiroshige Seko, secretary general for the LDP in the upper house, and Economy, Trade and Industry Minister Yasutoshi Nishimura. Since the death of former Prime Minister Shinzo Abe, the Abe faction has been unable to select a new chairman for lack of a candidate who can win broad support within the faction. Some within the LDP also believe that Hagiuda’s remarks are “aimed at gathering support from ‘anti-tax-hike’ members within the faction.”
Kishida remarked on Hagiuda’s move to a senior LDP official he met on Tuesday, saying, “There’s a power struggle even within the faction, isn’t there?” Within the Kishida faction, led by Kishida himself, a sense of alarm has arisen, with members saying, “The Abe faction is likely to increase its attacks on the prime minister over the tax hike in 2023.”
