Japan Finance Minister Casts Doubt on PM Kishida’s Tax-return Idea

The Yomiuri Shimbun

1:00 JST, October 8, 2023

Finance Minister Shunichi Suzuki expressed skepticism Friday regarding Prime Minister Fumio Kishida’s plan to return a higher-than-expected portion of central government tax revenues, saying, “I don’t think there are sufficient fiscal grounds.”

Suzuki’s remarks came during a post-Cabinet meeting news conference in reference to Kishida’s intention to include the tax-return move in an economic package to be compiled by the end of this month.

The finance minister’s comments are seen as trying to slow moves by the ruling parties to use the unexpected cash for tax cuts and other public benefits.

The Finance Ministry had estimated an initial figure of ¥65.2 trillion for fiscal 2022 tax income but the actual figure came in much higher at ¥71.1 trillion, according to a settlement of account announced in July.

The prime minister is believed to have come up with the idea to return this excess revenue to the public in fiscal 2022 and beyond.

Speaking on the day, Keiichi Ishii, the secretary general of Komeito — the junior coalition partner of the Liberal Democratic Party that is headed by Kishida — said tax cuts were a viable option in the economic package. “People will feel the benefits of income tax cuts [rather than a reduction in the consumption tax rate],” Ishii said.

However, it is possible that tax revenues will not increase in line with the expectations of the prime minister and the ruling parties. As of the end of August, fiscal 2023 tax revenue stood at ¥14.2 trillion, down 12.1% from the same period last year. This is because tax returns to companies that made advance tax payments in fiscal 2022 increased in the current fiscal year. Since these tax returns are set to continue, corporate tax revenues for fiscal 2023 could be lower than estimated.

“I don’t see tax revenues increasing in certain areas,” Suzuki said. “The corporate tax situation isn’t sound.”