Prime Minister Shinzo Abe on Wednesday officially announced his decision to postpone a consumption tax hike scheduled for April by 2½ years, setting the stage for the upcoming House of Councillors election.
With the current 150-day ordinary Diet session ending Wednesday, both ruling and opposition parties are gearing up for a battle for the upper house election, which Abe said will be held on July 10. Campaigning for the election will kick off on June 22.
At a press conference on Wednesday evening, Abe said, “The biggest focus of the upper house election is whether we will accelerate the engine for Abenomics or return to a long tunnel of deflation.”
The prime minister said his Abenomics economic policy is still just halfway through, but has produced results. He expressed his determination to commit to an agreement made among leaders of the Group of Seven major countries at the Ise-Shima summit meeting last week. The leaders agreed to take action to avert risks to the world economy.
Abe said he intends to relaunch the “three arrows” and further introduce comprehensive and bold economic measures in autumn.
The government had planned to raise the consumption tax rate to 10 percent next April. Abe’s decision announced Wednesday is contrary to his remarks in November 2014, when he said he would not implement a second delay in the tax hike. Abe had repeatedly said he would go ahead with the tax hike as planned unless events occurred with an impact comparable to the collapse of the U.S. bank Lehman Brothers or the Great East Japan Earthquake.
Abe said he intends to ask for a public mandate in the upper house election.
“My decision on another delay goes against my previous pledge,” Abe said. “This is my new decision. I sincerely accept criticism that such a decision is against an election pledge.”
On Wednesday morning, the secretaries general and Diet affairs chiefs of the Liberal Democratic Party and its coalition partner Komeito held talks and agreed to explain the tax hike delay thoroughly to the public.
Jun Azumi, chairman of the opposition Democratic Party’s Diet Affairs Committee, said at the party’s meeting of lawmakers Wednesday, “We only can compete [with the ruling parties] through numbers, so we must increase the number of seats we hold in both Diet chambers.”
Abe said he will order the compilation of a new package of economic stimulus measures to boost fiscal spending actions.
The Abe administration will draft a second supplementary budget for fiscal 2016, which includes funding for the economic stimulus measures, and aims to pass it in an extraordinary Diet session this autumn.
The package of economic stimulus measures will include public works as well as policy measures to implement a plan for a society in which all citizens are dynamically engaged. The plan is expected to be approved by the Cabinet soon, and some measures from the plan will be carried out in advance.
Because of sluggish consumer spending, the government will consider measures to stimulate consumption, such as the issuance of shopping coupons with premium benefits.
Some members of the ruling parties have called for a large-scale extra budget with a value of ¥5 trillion to ¥10 trillion.
In January, a fiscal 2015 supplementary budget, worth about ¥3.32 trillion, was passed in the Diet.
Following the first fiscal 2016 supplementary budget, which included expenditures for reconstruction in areas damaged by the Kumamoto Earthquake, Abe aims to a create a virtuous economic cycle by implementing more economic measures.
On Tuesday, the LDP and Komeito separately held policy research council meetings in which participating members agreed to Abe’s plan to postpone the scheduled consumption tax hike by 2½ years.
Komeito leader Natsuo Yamaguchi was due to hold a meeting with Abe on Wednesday afternoon, and will likely tell him that Komeito will accept the proposal to postpone the consumption tax hike. They are also expected to confirm a policy of party cooperation in the upcoming upper house election.
On Tuesday, Yamaguchi revealed that Abe told him during a meeting on Monday that his stance to introduce a reduced consumption tax rate remains unchanged, even though the consumption tax hike will be postponed by 2½ years.
On Tuesday evening, Abe explained his reasons for abandoning the dual election plan at a gathering of an LDP faction led by Hiroyuki Hosoda. Abe said that holding the two elections on the same date would not be understood by the public.
“There was the series of earthquake disasters in Kumamoto [Prefecture], and only 1½ years have passed since the previous [lower house election],” Abe said.(The Japan News)
Link: http://the-japan-news.com/news/article/0002986964
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