Tokyo, Oct. 19 (Jiji Press)–Japanese Prime Minister Sanae Takaichi on Monday left open the possibility of issuing government bonds to fund the envisaged reduction in the consumption tax on food items. “We are not ruling out bond issuance” to finance the tax cut, Takaichi told the Budget Committee of the Senate, the upper chamber of the Diet, the country’s parliament. She said that the government will “advance a review of both expenditure and revenue within the framework of budget formulation reform, while also closely monitoring tax revenue trends.” “We will appropriately control the annual amount of government bond issuance while scrutinizing the fiscal scale made possible even as the debt-to-gross domestic product ratio is steadily reduced,” she added. Takaichi has repeatedly said that the necessary funds for the tax cut would be secured without relying on deficit-covering bonds. At a press conference, Chief Cabinet Secretary Minoru Kihara said, “There is no change in the government’s policy.” Takaichi’s remarks on government bonds “was made in the context of the overall budget formulation,” he said. As measures to reduce the impact of rising prices, the government plans to cut the 8 pct consumption tax rate for food items to 1 pct for two years from next April and introduce an income-linked benefit program. The Diet will start full-scale deliberations on related legislation at a plenary session of the House of Representatives, the lower chamber, on Tuesday. Although the two steps are expected to require about 10 trillion yen in funding over the two-year period, the government has not yet identified any specific funding source. The prime minister dismissed the view that funding the tax cut by reducing government spending could offset the effects of the measure. “We will thoroughly reassess our policy priorities. This is not intended to wipe out the positive effects of the tax cut or increased spending,” she said. She also said that the government plans to “enhance the credibility of the yen by building a strong economy.” “Although there has been talk of a Takaichi-induced weak yen or high interest rates, I explicitly reject such claims,” she said. END [Copyright The Jiji Press, Ltd.]
