Photo/Illutration Corporate Japan appears largely against a consumption tax cut, an Asahi Shimbun survey showed. (Asahi Shimbun file photo)

Only five of 100 major companies surveyed favor a consumption tax cut as pushed by opposition parties in the runup to the July 20 Upper House election.

Forty-six of the companies oppose a tax cut while 49 companies declined to commit to one side or the other, according to The Asahi Shimbun survey conducted from June 6 to 19.

Measures against the rising cost of living are expected to be the top issue in the Upper House election.

The main opposition Constitutional Democratic Party of Japan has advocated a zero percent consumption tax on foodstuffs for up to two years to help households cope with higher prices.

All other opposition parties have advocated a consumption tax cut.

The ruling coalition has ruled out a consumption tax reduction, but it has pledged cash handouts of 20,000 yen ($140) for every resident, with an additional 20,000 yen for children and adults in low-income households exempt from residential taxation.

The survey indicated that corporate Japan is worried about the negative effects from a consumption tax reduction.

When asked why they were against cutting the levy, 23 of the 46 companies said the consumption tax “is a necessary source of revenue to support the social security system.”

Twelve companies said “financial restructuring will regress” and eight cited the “difficulty in securing alternative revenue sources to cover the loss in consumption tax revenue.”

“How will the trillions of yen be covered when the number of taxpayers is going to decrease?” asked Masaaki Yajima, president of Wacoal Holdings Corp. “It is unacceptable to pass on the tab in the future to the young people of today.”

Chiharu Fujioka, executive managing officer at Mitsui Fudosan Co., said, “We should be cautious about cutting the tax as a short-term economic stimulus measure when no alternative source of revenue has been secured.”

Makoto Tani, chairman of Skylark Holdings Co., said, “As a measure against high prices, cash transfers targeted at low-income families and households raising children who are truly in need are more effective than uniform tax cuts.”

Mitsuo Oya, president of Toray Industries Inc., said, “A consumption tax cut will benefit higher-income earners more, but cash handouts can be distributed exclusively to those in need of assistance.”

Some top executives of financial institutions said a consumption tax cut without alternative funding could undermine confidence in Japan’s public finances and cause interest rates to rise.

“The possibility exists that rising interest rates will increase the burden of interest payments, raising fears of a financial collapse,” said Akira Warita, president of Matsui Securities Co.

Those in favor of a consumption tax cut were mainly retailers in daily contact with consumers.

The survey asked these companies what kind of tax cut they would like to see. Three of the five companies said “a reduction limited to food products.”

Kensuke Hosomi, president of FamilyMart Co., said a tax cut “would stimulate consumption, and food is the foundation of people’s lives.”

At least one company said the tax system as a whole should be reviewed, and discussions should not be focused solely on the consumption tax.

As for the 49 companies that chose “other” or did not respond to the question, most of them declined to write a comment, indicating their intention to keep their political views private.

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