With regards to the plan to increase the consumption tax to 10% in October 2019, junior members of the Liberal Democratic Party revealed a proposal on May 12 seeking to freeze the tax hike and scrap the government’s goal of achieving a primary balance surplus. The move is backed by the Prime Minister’s Office [Kantei]. This may affect decision-making by Prime Minister Shinzo Abe, who has already postponed raising the tax rate twice, and LDP’s presidential election scheduled to take place in autumn.
The proposal was laid out by “Nihon no mirai wo kangaeru benkyokai (led by Hiroshi Ando, a Lower House member),” a policy study group within the LDP to have thoughts on Japan’s future. It argues that the tax increase be frozen because the impact from raising the rate to 8% from 5% in 2014 still lingers and Japan’s economy may slide into deflation again.” It received the endorsement from 39 members, who include LH members across all factions who were elected to office three times or less, Upper House members who are serving their first term and former lawmakers.
The proposal will be soon presented to Prime Minister Shinzo Abe and LDP Secretary-General Toshihiro Nikai. It incorporates Abe’s intentions. In February, Abe dined with junior LDP members at the Prime Minister’s Official Residence. When they voiced opposition toward the goal of achieving a primary balance surplus, Abe showed his understanding and encouraged them to “have more active discussions in the party.”
The draft of the proposal originally said “the tax raise must be frozen.” But the group coordinated opinions with the Kantei and changed the expression to “consider ‘freezing’ for the time being.” One policy study group member says that “we cannot release a proposal if the Kantei does’t give the go-ahead.” At a press conference announcing the proposal, Ando noted that “this will present a big policy shift,” acknowledging this will become a focal point in the presidential race.