Ishiba Distances Himself from ‘Tax Cut Populism’; Concerns about Lost Social Security Revenue Motivate Course Change

By Akihisa Ota and Hiroki Takao / Japan News Staff Writers

20:00 JST, May 10, 2025

In consideration of the people suffering from high commodity prices, Prime Minister Shigeru Ishiba was for a while leaning toward implementing a consumption tax cut. With a House of Councillors election approaching, Ishiba was also concerned that the Liberal Democratic Party, which he leads, could possibly fall behind opposition parties, which have been proposing consumption tax cuts one after another. However, opposition to such a cut has been strong within the party’s leadership.

But Ishiba ultimately concluded that aligning himself with “tax cut populism” and working with the opposition parties to implement such a cut would not be the best course of action, as it would take away funding for social security programs, leading to problems in the future.

On Thursday evening at a restaurant in Tokyo, according to sources, LDP Secretary General Hiroshi Moriyama turned to Ishiba and said to him encouragingly, “Let’s do what we can do.”

Both Ishiba and Moriyama agreed that a consumption tax cut was unnecessary. After dinner, Ishiba told those around him, “We cannot sacrifice future social security funding.”

At a House of Councillors Budget Committee meeting at the end of March, Ishiba responded to a question by saying, regarding cutting consumption taxes on food products, “We would like to look into what effects it will have.”

He wavered over the tax cut, confessing to his aides that “There might be people who would find it helpful for taxes to be lowered, even if only on food products.”

But Moriyama, whom Ishiba trusts most in the party’s leadership, consistently opposed a consumption tax cut. He urged Ishiba to change course, saying that “if we mention a tax cut, we should also mention a funding source.”

Moriyama, who serves as an advisor to the party’s Research Commission on the Tax System, is well aware of how difficult it will be to secure alternative funding sources should the revenue from the consumption tax decline.

The consumption tax is the source of funds for social security, and Itsunori Onodera, the chairperson of the party’s Policy Research Council, has made clear his opposition to cutting it, saying, “The LDP should compete based on its own policies.”

After being admonished by both the secretary general, who is in charge of the party affairs, and the policy chief, who is in charge of its policies, Ishiba began backsliding on his support for cutting the tax in mid-April.

Another factor pushing Ishida toward this decision is the results of the Constitutional Democratic Party of Japan’s announcement on April 25 that it would call for a 0% consumption tax rate on food products for one year in its campaign pledge for the upper house election. Party leader Yoshihiko Noda, who as prime minister had earlier led the consumption tax hike to the current 10%, was criticized for having “gone off course,” and the party saw no boost to its popularity.

In addition to the CDPJ, other opposition parties, including the Japan Innovation Party and the Democratic Party for the People, have made their own proposals for cutting the consumption tax.

Even some members of Komeito, the LDP’s partner in the ruling coalition, have called for a consumption tax cut.

But there is firmly rooted opposition to cutting the tax within the LDP. As a veteran member has put it: “Even if we started advocating for a consumption tax cut now, we would only be seen as imitating the opposition parties’ moves. It would not have any positive effect on us in the election.”

Moriyama told those around him, “It is wrong to think that cutting taxes would prove advantageous [for us] in the election. People would not cast their votes for such an irresponsible party.”

Moriyama has proposed holding a study session on the consumption tax, with the goal of curbing the popularity of tax cuts within the party.

At the end of April, Ishiba was told by one of his aides, “There is a certain segment of citizens who are critical of tax cuts. They support our party, and if we call for cutting the tax, they will fall away from us.”

On Thursday, Ishiba emphasized to those around him, “We are not a party that simply chases popularity.”