Finance Ministry confirms expected ¥1 trillion shortfall from tax exemption for food


The Finance Ministry has agreed with the government’s projection that tax revenue will fall by around ¥1 trillion if food and beverages are exempted when the consumption tax is raised to 10 percent in April 2017.

The ministry released the estimate Tuesday following debate on the exemption Monday at a session Monday of the Upper House Budget Committee.

Prime Minister Shinzo Abe told the committee that the relief measure is expected to reduce the consumption tax burden per person by about ¥4,800, based on household spending surveys conducted by the internal affairs ministry.

Akira Koike of the Japanese Communist Party countered that this amount, when multiplied by the population, means that the tax revenue shortfall will only total around ¥600 billion.

On Tuesday, the Finance Ministry explained that the government’s projection was calculated by multiplying the total consumption tax revenue by the proportion of items to be exempted from the planned tax rate hike, noting that the gap between the two estimates came as different calculation methods were used.

At Tuesday’s meeting of the Upper House Budget Committee, Finance Minister Taro Aso said, “We’re ready to give a detailed explanation about the statistics used by the government” to calculate its estimate.