Japanese Prime Minister Sanae Takaichi will insist on reintroducing taxes on food and beverages after a two-year suspension ends.
The statement was made by Japanese Finance Minister Satsuki Katayama on Tuesday, February 10 amid speculation that the government could change the policy because the tax increase is unpopular among voters.
As reported by ANTARA from Kyodo, Katayama emphasized that the suspension of consumption tax on food and beverages was only a temporary measure until a refundable tax credit system was designed and implemented.
He was responding to views that extending the suspension by more than two years could reignite concerns about the country's revenue sources and Japan's fiscal health.
The ruling Liberal Democratic Party (LDP), led by Takaichi, won a landslide victory in last Sunday's national election with a number of campaign promises, including a two-year suspension of food taxes.
The party assessed that the policy would not require the issuance of additional bonds to cover the deficit.
A number of economists assess it is still unclear whether the government will really reimpose the tax rate of 8 percent after two years, given the election of members of the High Council is scheduled to take place in 2028.
The move is considered potentially not well received by voters if they are still facing pressure due to low wages and inflation.
Katayama emphasized that a refundable tax credit system can help reduce the regressive nature of the tax, where low-income groups pay a larger proportion of their income for consumption taxes than high-income groups.
The tax system will provide cash benefits to taxpayers, especially low-income people, by allowing them to receive refunds on tax credits that exceed their tax obligations.
Katayama said the implementation of the system for the first time in Japan would be a breakthrough, adding that the plan would be discussed along with a proposal to cut consumption taxes in a cross-party national council.
At a press conference on Monday, Takaichi said his government would accelerate discussions on the schedule and funding source for the suspension of the consumption tax at the national council, with the goal of reaching a provisional conclusion by summer.
Currently, Japan's consumption tax is set at 8 percent for food and beverage purchases, and 10 percent for most other goods and services.
The English, Chinese, Japanese, Arabic, and French versions are automatically generated by the AI. So there may still be inaccuracies in translating, please always see Indonesian as our main language. (system supported by DigitalSiber.id)
