Prime Minister Yukio Hatoyama pledged again Monday that he will not raise the 5 percent consumption tax during his four-year term through summer 2013, even though Finance Minister Naoto Kan is saying he wants to launch debate on a possible increase.
“I will not raise the consumption tax as I said during campaigning for the Lower House election” last August, Hatoyama said. “I believe that Minister Kan understands that this (promise) must be kept.
“I have said that we have to be cautious about the consumption tax . . . as it could contribute to slowing down our efforts to eliminate wasteful spending.”
Hatoyama added, however, that he recognizes the need for debate on tax reform during the course of discussions on social security, including the national pension and insurance systems.
In the Diet earlier in the day, Kan said he plans to embark on serious discussions toward sweeping tax reforms, including a possible increase in the consumption tax, as early as next month once the fiscal 2010 budget clears the Diet. He also indicated that the government should wait until the next general election before hiking the tax.
“We would need to seek a public mandate before carrying out drastic tax reforms,” Kan, who is also deputy prime minister and minister in charge of economic and fiscal policy, told a session of the Lower House Budget Committee.
On Sunday, Kan said it is “the Hatoyama administration’s basic policy” to not raise the consumption tax during Lower House members’ current four-year terms.
At a news conference Monday, Chief Cabinet Secretary Hirofumi Hirano called the policy “a big pledge of the Hatoyama Cabinet,” stressing that raising the consumption tax and discussing the possibility are two different things.
Kan had previously focused on securing funds through spending cuts and put off such a debate until fiscal 2011, but he has apparently decided to move more quickly because social security costs and other expenditures are expected to expand while tax revenues are projected to fall.
Hirano, the government’s top spokesman, said the government should not slow down its efforts to cut back on wasteful spending even if it launches a debate on a tax hike.
Sadakazu Tanigaki, president of the Liberal Democratic Party, criticized Kan’s plan.
“The basic structure of the DPJ’s manifesto (for last August’s election) was that they could acquire funds easily by cutting waste and promised to do this and that, such as the child-rearing allowances, without raising the consumption tax in the four years,” he said.
“By saying they will start discussing the consumption tax, they are confessing that their own basic structure has already collapsed,” Tanigaki charged.
Shrugging off concerns over worsening fiscal conditions, Hatoyama vowed earlier Monday that his government will offer the full child-rearing allowance of ¥26,000 per month in fiscal 2011 as pledged in the DPJ’s manifesto.
Hatoyama’s remarks came after he made comments Sunday that could be taken as suggesting his administration may give up on paying the full child-rearing allowance.
In a dialogue with 10 members of the public held at his office, he said, “I don’t want to pass on debts to future (generations) and would rather create a system in which we can provide (the allowances) only with funds we obtain by cutting waste.”
On Monday, he said: “We don’t want to use the funds we collect by issuing new government bonds for child-rearing allowances. We will stick to our plan of using funds secured through cuts in expenditures.”
The DPJ-led tripartite coalition government plans to provide half of the amount — ¥13,000 — to each child of junior high school age or younger in fiscal 2010, which starts April 1, and commence offering the full amount in fiscal 2011.