Photo/Illutration Prime Minister Fumio Kishida speaks at a Nov. 2 news conference about a proposed economic policy package. (Koichi Ueda)

Prime Minister Fumio Kishida’s tax cut plan has not only failed to improve his Cabinet’s support ratings, but it has also isolated him from the top echelons of the ruling Liberal Democratic Party.

Kishida, however, continues to focus on the income tax cut measure apparently to turn around public opinion that he is a tax increase advocate due to his push for greater defense spending and more programs to stem the falling birthrate.

Some LDP lawmakers had called for a tax cut, so Kishida felt that Secretary-General Toshimitsu Motegi and other party executives would enthusiastically back his program, inside sources said.

But at his Oct. 18 meeting with party executives, he heard often strong opposition to his tax cut plan.

Koichi Hagiuda, the LDP policy chief, said the system used to implement an income tax cut was very complicated. He added that if a cash handout was to be offered at the same time, the administrative burden on local governments would be large.

Kishida is proposing a 40,000-yen ($266) cut in income taxes for every individual as well as a 70,000-yen cash handout to households that do not pay local residential taxes.

Hiroshi Moriyama, who chairs the LDP’s General Council, pointed out that it was difficult to implement an income tax cut as a “one-shot” measure.

For example, when Ryutaro Hashimoto was prime minister, he initially planned to cut the income tax by the same monetary figure for everyone, similar to Kishida’s proposal.

However, Hashimoto’s plan was changed to one that cut the tax rate, and that measure ended up continuing for nine years until 2007.

Moriyama also said an income tax cut could upset fiscal discipline.

Others at the meeting said cash handouts could be done as a one-shot measure, and the public would not strongly feel the benefits of an income tax cut.

They asked Kishida to reconsider his proposal, but the prime minister did not budge. He said that using a tax cut to return to the public revenues gathered through taxes would be easiest to understand.

Two days after his meeting with LDP executives, Kishida met with lawmakers in charge of tax measures from the LDP and junior coalition partner Komeito and instructed them to hammer out details for his income tax cut.

But even after the tax cut plan was announced, support ratings for the Kishida Cabinet continued to fall. Kishida also found himself increasingly isolated from LDP executives who raised such strenuous opposition to the proposal.

One executive who attended the Oct. 18 meeting said: “The prime minister was insistent about the tax cut because he hated being laughed at as someone only thinking about tax hikes. But the public saw through his ploy.

“This was a case of the strategist becoming entangled in his own schemes.”

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