Photo/Illutration Yoshihiko Noda, president of the Constitutional Democratic Party of Japan (Asahi Shimbun file photo)

The main opposition Constitutional Democratic Party of Japan will call for a one-year consumption tax exemption on food during the Upper House election campaign this summer.

CDP President Yoshihiko Noda announced the policy on April 25 as a means for the public to weather the increased cost of living and the impact of U.S. tariffs.

The exemption may be extended depending on economic conditions, Noda said.

Party policymakers on April 24 discussed three options concerning the consumption tax, including a combination of a tax credit and a cash benefit. This measure was one of the CDP’s campaign pledges for the Lower House election in October.

The other options discussed were lowering the consumption tax rate to 5 percent and temporarily cutting the tax rate to zero for food before introducing the package of a tax credit and a cash benefit.

The policymakers decided to leave the judgment to Noda and other party executives.

Noda adopted the third alternative, which was supported by many party members. 

While the Japan Innovation Party (Nippon Ishin) and the Democratic Party for the People have called for reducing the consumption tax rate to help households, Noda, known as a fiscal conservative, has been opposed to consumption tax cuts.

In 2012, when Noda was prime minister of the Democratic Party of Japan administration, he agreed with the then opposition Liberal Democratic Party and Komeito to raise the consumption tax rate to 10 percent.

At the April 25 news conference, Noda emphasized that the proposed consumption tax cut would be a temporary measure and his goal remains a tax credit coupled with a cash benefit.

He also said the CDP will propose specific financial resources to cover the expected decline in tax revenues without depending on new deficit-covering bonds.

Kazuhiko Shigetoku, who chairs the party’s Policy Research Committee, will lead discussions on how to finance the tax cut without undermining fiscal discipline.

On April 24, Upper House members of the LDP also called for cutting the consumption tax rate to zero for food for a limited period of about two years.

Senior Upper House representatives, including Masaji Matsuyama, secretary-general for the LDP in the upper chamber, met with LDP Secretary-General Hiroshi Moriyama and Itsunori Onodera, chairman of the party’s Policy Research Council.

The lawmakers submitted a document, including a list of policies to be included in the LDP’s campaign pledges for the Upper House election, to the party executives.

The document, which was not made public, said 80 percent of Upper House members called for lowering the consumption tax rate.

“The LDP has been ingrained with the image of a tax-raising political party,” the document said. “We cannot shake off the image unless we implement tax cuts.”

A group of about 70 mostly young and midranking LDP lawmakers who advocate fiscal stimulus has also compiled a proposal for a permanent consumption tax exemption on food and is collecting signatures from supporters.

Prime Minister Shigeru Ishiba and other LDP executives have dismissed calls for reducing the consumption tax rate.

(This article was compiled from reports by Takahiro Okubo and Hayato Jinno.)

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