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LDP members unhappy with compromise on reduced consumption tax rate

  • 2015-12-10 15:00:00
  • , Yomiuri
  • Translation

(Yomiuri: December 10, 2015 – p. 4)

 

 The ruling parties’ talks on the design of a system for the reduced consumption tax rate for certain items moved into final coordination toward making all food products eligible for lower tax rates on Dec. 9 through the intervention of the Kantei [Prime Minister’s Official Residence]. Impatient with the stalemate in the talks, the Kantei proceeded to steer a course toward including even processed foods for the reduced tax rate in consideration of Komeito’s wishes. There is smoldering discontent in the Liberal Democratic Party (LDP), where there is a firm belief that the lower tax rate should be limited to fresh food.

 

 Reacting to the opinion of some LDP members that it is necessary to make major concessions to Komeito in order to find a middle ground on this issue, Yoichi Miyazawa, chairman of the party’s Research Commission on the Tax System, blurted out to his aides: “Who said so?!”

 

 The LDP tax commission and others who consider themselves “taxation professionals” take issue with the preparations retailers and other businesses would need to make and the financial resources to cover the resulting revenue shortfall. They claim that if processed food will also be eligible for a lower tax rate when the consumption tax is increased to 10% in April 2017, businesses will not have enough time to prepare and no revenue sources have been identified, insisting that the reduced tax rate should only apply to fresh food.

 

 On the other hand, the Kantei is worried about the impact on the House of Councillors election next summer. Also, by-election for the House of Representatives seat in the fifth district of Hokkaido is scheduled for next April. Prime Minister Shinzo Abe does not want to upset Komeito.

 

 Abe told Hakubun Shimomura, special assistant to the LDP president, at the Kantei on Dec. 9 that the LDP needs to reach a compromise with Komeito, indicating that he wants to respect Komeito’s position. The ruling parties’ talks on the tax system, which failed to reach a decision on the issue of the reduced tax rate on the evening of Dec. 9, will now aim at reaching a conclusion in time for the compilation of the outline of tax reforms on Dec. 10.

 

 A senior LDP official explained on Dec. 9 why the Kantei’s initiative is resulting in a deal, noting that “the paradigm has been Kantei and Komeito versus the LDP all along.” Former Lower House speaker Bunmei Ibuki, who served on the LDP tax commission for many years, also pointed out on a BS TV program on the evening of Dec. 9 that the balance of power between Kantei and the LDP tax commission has changed.

 

 It used to be that the LDP tax commission was so powerful that even the prime minister did not have any influence, but now it is being forced to make concessions to Komeito.

 

 “While giving consideration to Komeito in order to sustain the coalition government is understandable,” a veteran LDP Diet member warned, “taking LDP members’ opinion lightly will weaken the party.” (Slightly abridged)

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