THE JAPAN NEWS

 

Prime Minister Shinzo Abe will hold a press conference Monday to announce his intention to dissolve the House of Representatives for a general election, with official campaigning starting Oct. 10 and voting on Oct. 22.

Attention will be focused at the press conference on how the prime minister explains the government’s goal of returning the primary fiscal balance to the black in fiscal 2020. This is because Abe wants to shift the use of the increased revenue from the consumption tax rate hike to improve child rearing support and other social security measures.

The consumption tax rate is scheduled to be increased from 8 percent to 10 percent in October 2019, and the government initially intended to use the increase in revenue to repay state debts. If the increased revenue is used for enhancing social security, it will be more difficult for the government to realize its goal for fiscal health.

Some lawmakers — mainly those who advocate realizing fiscal health — have emerged within the ruling Liberal Democratic Party to oppose Abe’s plan to change the use of the revenue increase.
Frustrations smolder in LDP

“We will soon summarize the view of the LDP and present it to the public clearly,” LDP Secretary General Toshihiro Nikai told reporters in Wakayama on Saturday, expressing his confidence that party opinion would be consolidated on how the different use of tax revenue and fiscal reconstruction should be expressed in the party’s campaign pledges.

However, frustrations are smoldering within the party, mainly from those who prioritize fiscal discipline.

“These are the party’s pledges, so we can’t follow the government on everything,” LDP General Council Chairman Wataru Takeshita said.

If some revenue from the consumption tax hike is used for child rearing support by reducing the amount to be used to repay state debts, expenditures for implementing policy measures will increase and tax revenue will not. Therefore, the deficit in the primary fiscal balance will increase.

In this regard, some LDP members believe the government needs to change its fiscal health goal, because if the government sticks to its current goal while upholding policy items that would worsen the fiscal situation, the government will be blamed as irresponsible.

 

“The prime minister will have no choice but to delay the timing for realizing the fiscal health goal while keeping the goal of fiscal reconstruction,” a junior LDP member said.

The LDP Policy Research Council is the party’s organization to formulate its policies. But it has never held full-fledged discussions regarding the use of revenue from the consumption tax rate increase. “It’s a serious policy change that’s coming as a bolt from the blue,” an LDP House of Councillors member said.

Fumio Kishida became LDP Policy Research Council chairman in August and has just started working to change the policy formulating framework that had been led by the Prime Minister’s Office and to strengthen the LDP’s policy research functions.

In his meeting with Abe on Saturday, Kishida broadly agreed to the prime minister’s intention to establish the change in the use of revenue from the consumption tax hike as a pillar of the campaign pledges. However, frustration has emerged in the party that the prime minister devised an important policy without consulting Kishida.

“The Abe-dominant method that was once shaken by lower Cabinet support in opinion polls has now revived,” said an LDP lawmaker who belongs to the party faction led by Kishida.