Kishida's tax hike plan to cover defense shortfall draws backlash inside LDP
Prime Minister Fumio Kishida's plan to raise taxes to secure some ¥1 trillion annually to cover higher defense spending from fiscal 2027 has faced a flurry of criticism from within the ruling Liberal Democratic Party. | BLOOMBERGPrime Minister Fumio Kishida’s plan to raise taxes to secure some ¥1 trillion annually to cover higher defense spending from fiscal 2027 has been met with a flurry of objections from inside his ruling Liberal Democratic Party.
Although the prime minister is aiming to decide by the year’s end on the scope, timing and size of any tax hikes, voices questioning the feasibility of his plan have grown increasingly louder.
The blowback to Kishida’s plan, revealed this week, came to a head at a general meeting of the LDP’s Policy Research Council on Friday, with participants hurling around opinions for about two hours.
Kishida, who serves concurrently as LDP president, is “trying to make decisions in an abrupt and forcible manner based on the assumption that tax hikes will be implemented,” a party member claimed.
“The process is too rough,” another member argued, adding that such a tax hike plan would usually require about a year of discussions.
According to Yohei Matsumoto, vice chairman of the policy council, about 40 of over 50 participants who spoke at the meeting opposed Kishida’s plan.
Only about a dozen participants expressed understanding for setting by the year’s end a direction for tax hikes as part of efforts to secure stable financing for higher defense spending.
On Thursday, Kishida stressed the need to introduce tax hikes to finance higher defense spending from fiscal 2027. “We have to ask for cooperation from the people on taxes,” the prime minister said.
He also indicated a plan of gradually raising taxes before full-fledged tax hikes from fiscal 2027.
Kishida’s instruction for the LDP to reach conclusions on the issue quickly has provoked criticism.
“I don’t think we can reach a consensus, and it’s not something for which a consensus should be made easily,” one LDP member said.
At a news conference on Friday, Hiroshige Seko, LDP secretary-general in the Upper House of parliament, concurred.
“I don’t think the scope and size of tax hikes can be decided within this year,” he said.
Seko underlined the necessity of holding discussions to carry out thorough expenditure reform and maximize the use of surplus funds.
Some inside the government have also frowned on the suggestion of a corporate tax hike, which could also be part of the prime minister’s plan.
“We should be careful about raising taxes, which would throw cold water at a time when companies are about to start making bold investments,” industry minister Yasutoshi Nishimura told a news conference.
“The situation is getting bad,” a senior government official said. “Without the understanding of the party’s policy council, the entire plan will be blown away.”
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