Japan's PM prospect Kishida cautious about cutting sales tax
31 August, 2020
Fumio Kishida, a senior Japanese ruling party official seen as among candidates to become next prime minister, on Monday (Aug 31) voiced caution over the idea of cutting the sales tax rate to greatly help the economy weather the hit from the coronavirus pandemic.
"The sales tax is a way to obtain revenue to pay for Japan's social welfare burden," Kishida told a television programme, when asked if he opposed cutting it from the existing 10 per cent rate.
"Cutting the tax rate would burden small and midsize companies with additional costs" such as for example adjusting their cashier systems to adapt to a fresh tax rate, he said.
The government's decision to raise the sales tax to 10 % from 8 per cent in October this past year pushed Japan's economy into recession, even before COVID-19 hammered consumption and exports this season.
Kishida said Japan must continue steadily to take fiscal and monetary measures to aid the economy, as demand won't bounce back strongly as a result of expected prolonged struggle with COVID-19.
Several ruling party lawmakers have recently called on the federal government to consider cutting the sales tax to cushion the pandemic's blow on households - a concept senior government officials have ruled out so far.
Japan has raised the sales tax twice under Prime Minister Shinzo Abe's administration as part of efforts to rein in the country's huge debt which, at twice how big is its economy, may be the biggest among major advanced economies.
Abe's abrupt announcement on Friday that he was stepping down because of health reasons triggers an election in his Liberal Democratic Party (LDP) to displace him as party president and then a vote in parliament to elect a fresh prime minister.
A former foreign minister, Kishida has been widely viewed as Abe's recommended successor but ranks lower in voter surveys. He has told supporters he is in the race.
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