Japan Prime Minister Stresses Return of Tax Revenues to Public; Policy Speech Gives Top Priority to Economic Measures

The Yomiuri Shimbun

17:31 JST, October 23, 2023

Prime Minister Fumio Kishida pledged to do his utmost to return increased tax revenues to the public through income tax reductions, in a policy speech at plenary sessions of both houses of the Diet on Monday.

Placing top priority on economic measures, Kishida also said the government would extend through spring next year programs to subsidize oil, electricity and city gas wholesalers.

Some people argue there is no room for increased tax revenues to be returned to the public via income tax reductions, as the nation’s finances continue to rely on government bonds. Another issue is how to ensure consistency between such tax reductions and tax increases to strengthen the nation’s defense capabilities.

In Kishida’s first policy speech since he shuffled his current Cabinet a second time, the prime minister said the government aims to ensure that Japan shifts from a cost-cutting economy with low prices, wages and growth to a growth-oriented economy driven by sustained wage increases and active investment.

Kishida said the next three years or so will be a “period of change,” with concrete measures to include tax incentives for companies that raise wages and the establishment of a tax reduction system to encourage domestic investment in semiconductors and other strategic areas.

Acknowledging that wage increases are not keeping up with price increases, Kishida said his policy of returning a portion of increased tax revenues to the public is a “temporary mitigation measure” aimed at a complete exit from deflation.

He did not touch on the method for returning the revenues, or the scale on which it would take place. He said he will soon hold a policy roundtable of the government and ruling coalition, and instruct the coalition’s tax policy research committee to study the issue as soon as possible.

As measures to address high prices, the prime minister said the government will provide subsidies to local governments which they can use at their own discretion to combat high prices, in addition to extending the existing subsidies for gasoline, electricity and city gas rates.

Kishida also said the government “will launch digital administrative and fiscal reform,” to reform society so that it can cope with the shrinking population. The reform aims to provide better-quality public services in areas such as child-rearing, education and nursing care.

The prime minister also acknowledged the shortage of local transportation providers as a serious problem, saying, “We will address the issue of ride-sharing [in which individuals use their own vehicles to transport paying passengers].”

In the area of diplomacy and security, the prime minister touched on such issues as Russia’s aggression against Ukraine and the situation in the Gaza Strip. He stressed the importance of “a free and open international order based on the rule of law.”

Kishida also said the government will continue summit-level talks with China with the aim of building “constructive and stable relations.”

Regarding the abduction of Japanese nationals by North Korea, he reiterated that “ high-level consultations will be promoted under my direct control.”

The prime minister has maintained his intention to achieve constitutional reform during his term as president of the ruling Liberal Democratic Party, which runs through autumn next year. Taking into consideration his remaining months in office, Kishida said, “I look forward to active discussions, even more so than before, including on the specifics of a draft provision,” to move forward with procedures for initiating constitutional revision in the Diet.