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2013/10/01
Kaieda holds press conference, expresses concern over use of consumption tax revenues
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On October 1, DPJ President Banri Kaieda held a press conference at party headquarters, commenting on Prime Minister Abe’s announcement that the consumption tax would be raised to 8% on April 1 next year, made that same day. Kaieda raised concerns regarding this, saying there was a danger that the administration would move in a different direction to that set forth in the three-party agreement concluded last year between the DPJ, the LDP and New Komeito. Under the agreement, the revenues ensuing from consumption tax increases are to be used for comprehensive reform of the social security and tax systems.
Kaieda also commented on the proposal to bring forward the abolition of the special reconstruction surtax on corporation tax by one year, now under consideration as a means of offsetting the economic effects of an increase in the consumption tax. Considering the fact that the special reconstruction surtax on individuals would be left untouched, Kaieda stated, “From the perspective that the burden of the unprecedented disaster of the Great East Japan Earthquake should be shared by the entire nation, the idea that only corporations should avoid this burden by having [the date of abolition] brought forward gravely damages the idea of having the whole nation engaging in the reconstruction effort in a spirit of communal ties and cooperation.”
Furthermore, Kaieda expressed doubts about the 5 trillion yen policy package being considered as an economic measure. He explained that under the three-party agreement concluded between the DPJ and the LDP and New Komeito, the increase in tax revenues engendered by the consumption tax rise would be applied to comprehensive reform of social security and tax. He went on: “I think that this measure deviates significantly from path of the comprehensive reform of social security and tax.” Regarding reports that the 5 trillion yen package would include unnecessary and non-urgent public works projects, he raised the concern that “this would mean tax revenues obtained by increasing the consumption tax would be directed to inappropriate uses.”
Kaieda noted that “Today, October 1 marks the start of a 1% cut in National Pension Fund benefit payments.” He added, “We cannot accept the fact that the discussion over social security, which was to have been the prime reason for raising the consumption tax, has been put on the backburner.” Kaieda also pointed out that there has been no movement on administrative and financial reform, particularly the reduction in the number of Diet members. He expressed his determination regarding this issue, stating, “Currently, not only is no progress being made on efforts toward self-sacrifices [reduction in number of Diet members etc.], but such efforts are even going backwards. The DPJ is calling for an early start to the Diet session. During this session, we will work in the Diet toward implementing reductions in the number of Diet members and administrative and financial cuts.”
Asked by a reporter whether he believed the economic policies announced by Prime Minister Abe would lead to higher wages and an increase in company profits, Kaieda responded, “I don’t believe that policies purported to lead to an increase in wages, in particular the move to bring forward the abolition of the special reconstruction surtax on corporation tax by one year, will in fact have such an effect.” He pointed out the reality that only 50% of large corporations, and 27% of small and medium-sized enterprises (SMEs) were in fact paying this reconstruction surtax, and stated, “It is such SMEs who are responsible for supporting a great many jobs, and so I do not believe that a reduction in the special reconstruction surtax for corporations will lead to an increase in wages.”
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