Japan Govt to Adopt Consumption Tax Cut Plan Wed. Afternoon

Tokyo, Aug. 5 (Jiji Press)–The Japanese government plans to make a decision Wednesday afternoon on a plan to lower the consumption tax rate on food from 8 pct to 1 pct for two years from next April as an anti-inflation measure. The plan was formally approved by the ruling Liberal Democratic Party’s decision-making General Council at its extraordinary meeting held in the morning. The party and its coalition partner, the Japan Innovation Party, will hold a meeting of their policy chiefs later in the day to finish the ruling bloc’s procedures on the tax cut plan, before its adoption by the cabinet of Prime Minister Sanae Takaichi, who heads the LDP. At the Wednesday morning meeting, the LDP’s General Council approved the plan unanimously among participating members although some attendees called for the clarification of financial resources for the measure. Former LDP tax system research commission chief Yoichi Miyazawa, who prioritizes fiscal discipline, and former Defense Minister Gen Nakatani, an opponent of the planned consumption tax reduction, were absent from the council meeting. Takaichi announced the tax cut plan Thursday and asked the LDP to discuss it together with a measure to provide cash benefits to middle- and low-income earners in order to effectively reduce the tax rate for food to zero. The LDP’s research commissions on the tax and social security systems held two joint meetings to discuss the proposal. Concerns about an expected lack of financial resources and about whether the tax reduction would produce intended economic effects were raised in the meetings, but a majority of participants supported the plan. They left a decision on the matter up to tax system research commission head Itsunori Onodera, effectively greenlighting the proposal. After the cabinet decision, the government is expected to adopt a tax system reform outline in September and submit legislation to implement the consumption tax cut to an extraordinary session of the Diet, the country’s parliament, expected to be convened in autumn. END [Copyright The Jiji Press, Ltd.]