Many lawmakers from the ruling Liberal Democratic Party are rebelling against Prime Minister Fumio Kishida’s sudden directive to work out a tax cut as part of a new economic package.

LDP lawmakers discussed the income tax break that Kishida announced would be implemented in June next year at a general meeting of the Policy Research Council at its headquarters on Oct. 31.

The raucous session came amid the continuing decline of the Cabinet’s approval rating, as the administration faces mounting challenges and criticism.

Many lawmakers expressed dismay at being blindsided by the proposed tax cut. 

“This tax break should be withdrawn," shouted a mid-career LDP lawmaker at the meeting.

Kishida had instructed coalition parties officials to work out the details of the government proposals that would offer 40,000 yen ($264) reductions in income and resident taxes per taxpayer and dependent family member.

Around 100 LDP lawmakers from both chambers attended the closed-door session.

The topic was the new comprehensive economic measures, set to be approved by Cabinet ministers on Nov. 2, which aim to cushion the impact of rising prices.

However, the latter part of the one-hour-and-a-half discussion focused primarily on the tax break, according to several attendees.

“(The tax break plan) was criticized by both a faction advocating for financial reform and a faction pushing for proactive financial spending (to stimulate the economy),” according to a youthful Upper House member.

A mid-career lawmaker from the financial reform faction said that there had been internal deliberations about boosting defense spending when three key security policy documents were revised at the end of last year.

“But this tax break was proposed by the prime minister without any discussion. I can’t see the government’s seriousness at all,” the lawmaker complained.

Another young lawmaker criticized, “If the prime minister proposed a policy favorable to the public, his approval rating would likely go up. But this time, it has gone down because people see it just as an election ploy.”

At the end of the meeting, Koichi Hagiuda, chairman of the Policy Research Council, took the microphone in an attempt to calm the situation.

“If we retract the tax cut policy now, the administration won’t be able to stand its ground,” he said. “I understand everyone has their own opinions, but I would like you to ‘support’ what has been decided with one voice.”

Although the lawmakers approved the comprehensive economic measures, a young lawmaker said that “the administration is weakening” amid a series of dissenting opinions.

It is unclear whether the tax cut will be implemented in one round in June next year or will be extended for two years or longer.

Hagiuda said, “It hasn’t been decided that it will be ‘for just one year.’” He intends for the decision to be made based on trends in companies’ wage increases.

On the other hand, Kishida emphasized in the Lower House Budget Committee meeting on Oct. 31, “I would like to boost the economy so that (the tax cut) ends in one go (next year).”

The government is making arrangements to value the economic measures at about 17 trillion yen. The combined total for the highlighted tax cut and cash handouts is expected to exceed 5 trillion yen.

The government estimates that 3.5 trillion yen is needed for the 40,000 yen cuts in income and resident taxes per taxpayer and dependent.

The 5 trillion yen also includes more than 1 trillion yen for cash handouts to low-income households, partially those exempt from taxes who would not fully enjoy the benefits of the tax cut.

The government plans to provide cash handouts of 70,000 yen per households that are exempt from paying resident taxes.

The size of the stimulus package might change.

Other measures requiring large budgets have also been included in the package.

Subsidies aimed at lowering gasoline prices and electricity and utility bills will be extended until the end of next April.

The current budget is forecast to be smaller than last year’s second supplementary budget of 29 trillion yen. But it is still massive compared to budgets prior to the COVID-19 pandemic.

The Kishida administration had pledged to return the spending structure that ballooned due to the pandemic to its pre-pandemic level. But relaxed financial discipline has not yet been restored.