自民じみん 税制ぜいせい調査ちょうさ会かい 消費しょうひ税ぜいの扱あつかいめぐり勉強べんきょう会かい開催かいさいへ

Regarding the handling of the consumption tax, executives of the Liberal Democratic Party’s Tax Research Commission held a meeting and confirmed that they will hold a study session next week for party members to exchange opinions on the impact of a tax rate reduction and practical issues involved.

The Liberal Democratic Partys Tax System Research Council held a meeting on the afternoon of the 15th, attended by Chairman Miyazawa, Secretary-General Moriyama, Organization Movement Headquarters Chief Obuchi, and other executives.

And, since not only opposition parties but also some members within the party are calling for a reduction in the consumption tax rate, it has been confirmed that a study session on the consumption tax will be held next week for party-affiliated lawmakers.

In the study group, we exchange opinions while presenting materials on topics such as the impact of lowering the consumption tax rate, the increase in administrative burdens associated with tax rate changes, and other practical issues, given that consumption tax revenue serves as a financial resource supporting social security and local government finances.

On the other hand, at todays executive meeting, it was also confirmed that the study session would not be a place to reach a conclusion about the consumption tax.

After the meeting, Mr. Miyazawa told reporters, The executive meeting did not reach a conclusion to not reduce the consumption tax rate.

However, the executives share the understanding that tax cuts have considerable problems, and said, It is a very difficult issue both practically and financially.

The ruling party, the Liberal Democratic Party LDP, has persistent cautious opinions within its leadership regarding lowering the consumption tax rate as a countermeasure against U.S. tariff measures and rising prices.

It is considered a source of funding that supports social security and local finances, and since legal revisions would take time and are not suitable, they are considering alternative measures.

However, within the party, there are also voices calling for a tax rate reduction with an eye on the House of Councillors election.

The Komeito Party is considering tax reductions, including lowering the reduced consumption tax rate, as well as providing temporary benefits as a measure to address rising prices and tariff measures.

On top of that, they are saying, We are adding every type of tax on top of this, and are proceeding to discuss the details.

We will also indicate the necessary financial resources in case further tax cuts are implemented.

Komeitos Akaba, chairman of the Tax System Research Council, said at a press conference, Tax cuts are necessary so that we dont lose out to rising prices.

There are various opinions within the party regarding the consumption tax, and we must engage in vigorous discussions about it.

Tax policy is fundamental to peoples lives, so its not desirable for the ruling parties to say different things, he said.

Also, regarding securing financial resources when implementing tax cuts, Issuing deficit-financing government bonds is extremely easy, and it would completely eliminate fiscal discipline.

The Tax Commission pointed out that we must proceed without considering the issuance of deficit-financing government bonds.

The Constitutional Democratic Party, an opposition party, has put together a proposal to temporarily reduce the consumption tax rate on food items to 0% for one year in principle, and then transition to a tax credit with benefits system that provides benefits or income tax deductions.

With the reduction in the tax rate on groceries, an annual decrease in tax revenue of 5 trillion yen is expected, and discussions are underway to secure the necessary funds by means other than issuing government bonds.

The Japan Innovation Party has proposed the temporary abolition of the consumption tax on food as a tariff measure and to combat rising prices, effective until March 2027.

This is expected to result in an annual decrease in tax revenue of approximately 4.9 trillion yen, and the necessary funds will be covered by the surplus in total tax revenue and other sources.

The Communist Party aims to urgently lower the consumption tax rate uniformly to 5% with the goal of eventually abolishing it, and to eliminate the invoice system that is intended to accurately keep track of tax payments.

It is expected that there will be a decrease in tax revenue of around 15 trillion yen per year, and the necessary financial resources will be secured by measures such as raising corporate taxes, asking large corporations and wealthy individuals to bear an appropriate share of the burden.

Communist Party Chairman Tamura said at a press conference, By proposing a consumption tax reduction together with measures to secure financial resources, we can realize it in a stable and permanent manner and respond to the voices of the people.

“It is an irresponsible proposal to cover it with deficit-financing bonds, and as a party, we are calling for a review of tax cuts and tax privileges for large corporations and ultra-wealthy individuals. We are determined to open the way for a reduction in the consumption tax at all costs,” he said.

Reiwa Shinsengumi states that ideally, the consumption tax should be abolished, but at the very least, it should be uniformly reduced to 5%.

With the abolition of the consumption tax, an annual decrease in tax revenue of 24 trillion yen is expected, and with a uniform reduction to 5%, an annual decrease of 12 trillion yen is expected. In both cases, it is planned to respond by issuing new government bonds.

Chief Cabinet Secretary Hayashi: Lowering the tax rate is not appropriate At an afternoon press conference, Chief Cabinet Secretary Hayashi stated, Given that Japans consumption tax is positioned as an important source of revenue supporting the all-generation social security system amid a rapid increase in social security benefit expenses due to the aging population, the government does not consider it appropriate to lower the tax rate, including for food products.

Consumption Tax: Background The consumption tax was introduced under the Takeshita administration in April 1989, with a tax rate of 3%.

The reason for its introduction was the need for a stable system to cover social security costs in anticipation of a full-scale aging society.

The consumption tax rate was raised to 5% in April 1997.

In the course of the tax reform, the decision was made based on the opinion that, instead of relying on income tax revenues—which are mostly paid by the working generation—the financial resources for social security should be shared more broadly among people from various backgrounds by raising the consumption tax rate.

Even so, as the population ages rapidly, the costs required for social security continue to increase.

In the initial budget for fiscal year 2010, the national social security-related expenses exceeded 27 trillion yen, which is about twice as much as in fiscal year 1997.

In this context, in 2012, as part of the integrated reform of social security and taxes promoted by the Noda administration, a policy was decided to raise the consumption tax rate in two stages: from 5% to 8% in 2014, and then to 10% in the following year, 2015.

Accordingly, the law clearly states that, in principle, tax revenues are to be used for social security expenses, and the consumption tax has been designated as a tax for the purpose of social security.

Instead of just raising the tax rate, they also decided to limit how the tax revenue can be used.

After that, under the second Abe administration, the tax rate was raised to 8% as scheduled in April 2014, but considering factors such as the resulting decline in personal consumption, the increase to 10% was postponed twice.

And then, in October 2019, the consumption tax was raised to the current 10%, and at the same time, a reduced tax rate of 8% was introduced for items such as food.

[Video] Introduction of 3% Consumption Tax: News Footage from the Time 2 minutes 34 seconds, Broadcast in April 1989 *Note: The video cannot be viewed via data broadcasting. Consumption Tax Revenue Consumption tax revenue is considered to be stable and less affected by changes in the economy or population structure, making it, along with income tax and corporate tax, one of the main pillars of government revenue.

Of the 10% tax rate, 7

8% is national tax, 2

2% is local tax.

The consumption tax revenue is 24.908 trillion yen in the general account revenue of this fiscal years initial national budget.

Also, local taxes amount to 6.5227 trillion yen.

According to the Ministry of Finance, the tax revenue from the standard tax rate of 10% amounts to approximately 2.7 trillion yen per 1% for both the national and local governments combined.

If this 10% were hypothetically reduced by half to 5%, it is calculated that there would be a decrease in revenue of 13.5 trillion yen.

Additionally, the tax revenue from items subject to the reduced tax rate of 8%, such as groceries, amounts to approximately 600 billion yen per 1% for both the national and local governments combined.

If this 8% were hypothetically reduced to 0%, it is calculated that there would be a revenue decrease of 4.8 trillion yen.

Usage 2

1 out of 2%

2% is, in principle, allocated to social security such as pensions and medical care, based on legal provisions.

On the other hand, local taxes 2

Of the remaining 1% out of the 2%, it is used as a local financial resource with flexible applications, and is spent not only on social security but also on various initiatives by local governments.

Compared to other countries, Japans consumption tax is implemented overseas under names such as value-added tax.

According to a summary by the Ministry of Finance as of January 2024, Japans tax rate is the seventh lowest among the 51 countries and regions that are members of the OECD Organisation for Economic Co-operation and Development, the EU European Union, and others.

There are 42 countries and regions that apply reduced tax rates or exempt items such as groceries from tax.

Just like Japan, Australia, South Korea, and Cambodia also have a 10% tax rate, but in all of these countries, the tax rate on food is either 0% or food is originally tax-exempt.