LDP Mulls Tax Payments by Members for Undocumented Funds; Handling of Revenue from Parties Criticized as ‘Tax Evasion’

The Yomiuri Shimbun
Prime Minister Fumio Kishida answers questions during a session of the House of Representatives’ Budget Committee in Tokyo on Wednesday.

The Liberal Democratic Party is considering having its lawmakers — if they failed to list money such as kickbacks from their factions’ fundraising parties on political funds reports — pay taxes if the use of such funds cannot be ascertained, according to LDP sources.

The ruling party is taking the view that such funds as being subject to taxation such as income tax. The move apparently aims to dispel the public’s distrust of politics, as the recent funds scandal has been criticized in Diet deliberations as a suspected form of tax evasion.

In principle, political funds collected by political organizations through donations and fund-raising parties are exempt from taxation, as the public interest in political activities is considered important. However, many LDP lawmakers have failed to explain whether the undocumented funds were in fact used for political activities, or how they were specifically used. In light of this, opposition parties and others have argued that such funds should be deemed “miscellaneous income” of individual LDP lawmakers — and thus subject to income taxation.

During intensive deliberations of the House of Representatives’ Budget Committee on Wednesday, LDP lower house member Kenichiro Ueno said, “If the money was used for personal purposes or if it was confirmed to have been used as expenses [for certain activities], the money should be deemed as personal income and then taxed.”

Ueno also called for Prime Minister Fumio Kishida, who is also the LDP’s president, to instruct members of the ruling party to correct reports promptly and have them pay the taxes. The LDP is expected to consider specific ways to pay the taxes.

In the scandal involving LDP factions over alleged violations of the Political Funds Control Law, a survey by the party has found that 85 members failed to list a total of about ¥580 million in income on political funds reports from 2018 to 2022.