The ruling Liberal Democratic Party and Komeito have agreed to keep a proposed reduced rate for certain items as an option in their discussions on how to cushion the impact of the next consumption tax increase.
The agreement came Tuesday as many ruling bloc lawmakers, particularly from Komeito, expressed opposition to a proposal by the Finance Ministry to introduce a system in which the equivalent of 2 percentage points of the consumption tax on food and drinks, excluding alcohol, would be refunded.
As measures to ease the impact of the planned consumption tax rise from the current 8 percent to 10 percent in April 2017, the two parties initially considered introducing a reduced tax rate. But they ran into difficulty, such as how to select products to which the lower rate should apply.
The ministry proposed the refund system in hopes of breaking the deadlock, but it has not won much support.
At Tuesday’s meeting on tax affairs with the LDP, Komeito said some of its members are unhappy about the refund system’s heavy burden on consumers.
Komeito also said the two parties should hold more discussions while examining the pros and cons of both the reduced rate and the refund system.
The LDP said some of its members support the ministry’s proposal. But it accepted Komeito’s opinion, in view of mounting security concerns over the use of the My Number common identification system for taxation and social security for the refund system.
Speaking to reporters after the meeting, Tetsuo Saito, chief of Komeito’s tax system commission, said efforts should be redoubled to pursue the reduced tax rate.
Takeshi Noda, chairman of the LDP’s Research Commission on the Tax System, said the party will continue discussions while taking into account Komeito’s opinions.