The government is considering introducing a reduced tax rate for some products to ease the burden when it raises the consumption tax rate by 2 percentage points to 10 percent in April 2017, Chief Cabinet Secretary Yoshihide Suga said Tuesday.
“It is extremely natural that (the government) will introduce reduced tax rates simultaneously” with the tax hike, Suga said, referring to rates aimed at helping lower income earners and smaller companies in a tax reform plan adopted by the ruling coalition last year.
The government’s chief spokesman told a news conference that a pledge made by the Liberal Democratic Party in the House of Representatives election last December and a subsequent coalition accord with the Komeito party made a similar “promise” to the public.
Separately, LDP Secretary-General Sadakazu Tanigaki said former industry minister Yoichi Miyazawa will replace Takeshi Noda as chairman of the party’s tax panel. The panel — the Research Commission on the Tax System — plays a key role in drafting annual tax reforms.
Noda is known to be cautious about implementing a nonuniform sales tax rate. He was backed in that by some LDP lawmakers and the Finance Ministry, which fears that multiple rates will decrease tax revenues. Multiple sales tax rates are widely used in Europe.
The moves suggest a show of consideration to Komeito by the LDP as the two parties step up cooperation in campaigning for next summer’s House of Councilors’ election, some observers say.
Komeito leader Natsuo Yamaguchi welcomed Suga’s comments: “A top government official showed a position similar to what the (Komeito) party advocated during last year’s Lower House election,” he said. “It will be a major guideline for upcoming (taxation) consultations between the ruling parties.”
On Monday, Suga said the government will create “confusion” unless it offers reduced tax rates on daily necessities together with the hike.