Prime Minister Shinzo Abe's policy speech to the full Diet this Friday will stress his administration's ability to balance exemptions to the planned consumption tax hike with fiscal reform goals, according to political sources.
Abe will emphasize that the government's finances can be rebuilt as planned despite an exemption on most food products when the consumption tax is raised to 10 percent in April 2017, the sources said Monday.
They said he will explain the plan to leave the tax on food products, excluding those served in restaurants, and alcoholic beverages, at the current 8 percent.
Abe will express his resolve to tackle other areas of tax reform to reduce disparities in living standards, including by enhancing the income tax and inheritance tax brackets.
He is expected to reaffirm his commitment to turning the country's primary balance into a surplus by fiscal 2020 and argue that fiscal reform is not possible without economic revival.
The sources said Abe will express his hope for Japan to display leadership in addressing issues in the international community as the host of the Group of Seven summit in the Ise-Shima area in Mie Prefecture in May.
He is expected to strongly criticize North Korea's nuclear test earlier this month, the country's fourth on record, as a grave threat to Japan's safety.
He will likely express a desire for the formulation of a strong U.N. Security Council resolution on Pyongyang, as well as for Japan to step up its own sanctions on North Korea, the sources said.