November 4, 2023

Akahata editorial (excerpts)

The Cabinet led by Prime Minister Kishida Fumio on November 2 approved a 17-trillion-yen economic stimulus package which includes a tax cut of 40,000 yen per person (income tax 30,000 yen + residential tax 10,000 yen) as one of the main pillars. However, the proposed tax cut will be implemented only once in FY 2024. It is just a drop in the bucket under a situation where the average annual real income of workers decreased by 640,000 yen from its peak in 1996.

PM Kishida reiterated his intent to return increased tax revenues to the general public while refusing to consider lowering the consumption tax rate as a measure to achieve this.

To lower the sales tax is the most effective economic measure in terms of easing the cost of living pressures. This has been indicated by economic experts’ estimate that the GDP-boosting effect of a sales tax cut is far greater than that of income tax cuts.

Nevertheless, Kishida said, “I’m not thinking of reducing the consumption tax rate in the first place. So, I never even think of the effect,” in his response to questions from Japanese Communist Party lawmaker Yamazoe Taku at a House of Councilors Budget Committee meeting on November 2.

Another main pillar of the Kishida government’s economic package is a plan to give tax breaks to corporations to achieve “sustainable wage growth”. Like the Kishida government, successive past governments implemented corporate tax cuts as an incentive for them to raise wages. This measure, however, only led to large corporations increasing their internal reserves and did not work to promote wage growth.

In order to realize the above-inflation wage hikes, it is vital to utilize large corporations’ internal reserves which amount to over 500 trillion yen. The government should seriously consider putting a levy on the huge internal reserves as proposed by the Japanese Communist Party.

Past related article:
> JCP calls for taxing large corporations’ internal reserves to implement pay hikes and ‘green investments’ [ February 25, 2022]