Speculation that the delayed second stage of the consumption tax hike will be postponed yet again was reinforced Friday after a pro-government daily reported that Prime Minister Shinzo Abe is considering the option.
On the front page of its Friday edition, The Yomiuri Shimbun, whose English version is known as The Japan News, reported without naming a source that Abe is considering delaying the hike by one to two years due to concern it could trigger another economic slowdown.
The paper also reported that Abe is considering dissolving the Lower House for a snap election to coincide with the summer Upper House election, which is crucial to his quest to amend the Constitution.
The April 2017 tax hike would complete the doubling of the sales tax to 10 percent that was legislated in 2012. The first stage raised it to 8 percent from 5 percent in April 2014.
In November 2014, Abe postponed the second stage of the hike, originally due in October 2015, and subsequently dissolved the Lower House. His Liberal Democratic Party won the snap election by a landslide. Speculation is rife Abe will repeat the maneuver this time as well.
Abe has said he would follow through with the second stage as planned barring major crises like the 2008 global financial crisis or the March 2011 quake and tsunami.
But he has recently been rushing to take several measures that many lawmakers and political observers view as preparations for a rare double election this summer.
Last month, for example, Abe said he would pursue legal revisions to correct the vote-value disparity between rural and urban areas before the Diet closes in June.
The comments were seen as a potential sign that he is preparing to dissolve the lower chamber because not doing so could lead to the Supreme Court declaring future Lower House elections unconstitutional over the vote-value issue if it is not corrected.
Then on Wednesday, Abe held a meeting in Tokyo with Nobel Prize-winning economist Joseph Stiglitz, who urged him not to raise the sales tax.
Abe’s government is also rushing to hammer out new measures to ease the acute shortage of day-care services for working mothers by the end of March. The frustration of the mothers is likely to become an issue in the Upper House race.
All of these recent moves are seen as attempts to remove obstacles that could delay the consumption tax hike for a second time and interfere with his highly anticipated double election plan.
On Friday, Chief Cabinet Secretary Yoshihide Suga denied the validity of the Yomiuri’s report.
“It is not based in fact,” he said. We haven’t started considering postponing the consumption tax rate hike.”
But few in Nagata-cho, the epicenter of Japanese politics, took Suga’s denial at face value.
An old Nagata-cho saying goes: “A prime minister is allowed to lie about two things; his or her health and the timing of the dissolution of the Lower House.”
Article 7 of the Constitution has traditionally been interpreted in such a way as to allow prime ministers to dissolve the Lower House at their discretion, although the article does not explicitly stipulate they can do so.
This interpretation has allowed many prime ministers to call snap elections when the ruling parties were expected to win big. And these leaders usually remained silent, or even lied, about their intentions until the last minute before dissolving the chamber.
For their part, right-leaning activists and lawmakers believe the Upper House election will be their “last chance” to revise the postwar Constitution.
Abe is the first prime minister to openly advocate revising the Constitution — in particular war-renouncing Article 9.
Revising the supreme code is difficult to do under the current requirements. But Abe’s ruling coalition now holds more than two-thirds of the Lower House. To initiate a national referendum on revising the Constitution, the support of more than two-thirds of lawmakers in both chambers is required, according to the Constitution.