Prime Minister Shinzo Abe on Tuesday ordered senior members of the ruling Liberal Democratic Party to work toward designating fresh food as the only category subject to lower tax rates when the government raises the consumption tax to 10 percent in fiscal 2017.
Meeting with senior LDP representatives, Abe said discussions by the ruling parties on the introduction of various tax rates need to be within the framework of the government's social security and tax reform policy, according to the LDP's tax panel chief Yoichi Miyazawa.
Under the policy, the increased revenue from the planned consumption tax hike will be used to finance pension and medical expenses. Abe's instructions indicate his wish to limit the number of items subject to lower tax rates in order to minimize the impact on state finances.