Liberal Democratic Party members are concerned that Prime Minister Sanae Takaichi’s plan to cut the consumption tax rate on food could negatively affect the ruling party’s performance in the 2028 House of Councilors election.
Under the plan, the consumption tax rate on food will be lowered to 1% for two years from next April. It would return to 8% within a year after the next Upper House election, likely making the tax hike a major campaign issue.
“Moving the consumption tax rate up and down will disrupt society. Such a thing should not be done,” Upper House member Shoji Nishida said at Friday’s meeting of the party’s Tax System Research Commission. The opposition of Nishida, a prominent advocate of aggressive fiscal spending, to the party leader’s policy highlights the growing sense of crisis among some party members.
On Thursday, Takaichi outlined the tax cut plan to LDP members. A medium-ranking Upper House lawmaker whose term will expire in 2028 voiced frustration, saying that opposition parties would campaign against the planned return of the tax rate to 8% and that the LDP would be unable to fight an election on a policy of restoring the tax rate.
The concern reflects a history in which consumption tax hikes have been a political minefield for the ruling parties.
The LDP raised the tax rate to 5% from 3% as a ruling party in 1997 and then suffered a crushing defeat in the Upper House election the following year.
The now-defunct Democratic Party of Japan, which passed legislation in 2012 to raise the rate to 10% in two steps, lost power in the election of the House of Representatives, the all-important lower chamber, the same year.
The LDP regards the 2028 Upper House election as a crucial step in regaining its majority there. Takaichi’s plan is drawing opposition partly because of that.
On Thursday, Takaichi told reporters that it is not necessary to set an economic clause allowing the tax cut to be maintained depending on economic conditions.
“I will bear full responsibility to restore the tax rate to the current level in two years,” she declared, apparently aiming to make the tax hike a foregone conclusion and avoid making it a campaign issue.
Still, a senior LDP lawmaker not aligned with Takaichi expressed skepticism. “I wonder if the tax rate can really be raised amid a chorus of opposition,” the lawmaker said.
In 2010, then-Prime Minister Naoto Kan suffered a crushing defeat in an Upper House election by flip-flopping on the consumption tax repeatedly. Against the background, some LDP members are concerned about what appears to be Takaichi’s lack of consistency.
