Government unlikely to detail revenue-recovery plan for sales tax hike exemptions: Aso


The government and ruling parties do not plan to specify ways to make up for a state revenue loss as a result of a lower tax rate on certain foods when the sales tax is hiked in 2017, Finance Minister Taro Aso indicated Friday.

The government will need to secure around ¥1 trillion to exempt all food items when the consumption tax is raised by 2 percentage points to 10 percent.

The Liberal Democratic Party and its junior coalition partner Komeito were aiming to reach a final agreement Friday on which items would be subject to the consumption tax hike exemption to ease the negative impact on consumer spending.

The talks “have almost come to a final stage,” Prime Minister Shinzo Abe told reporters. “I would like (the parties) to aim for the best outcome.”

Amid ongoing negotiations, it is understood the government is hoping to find ways to make up for the loss by the time it compiles a budget for fiscal 2017.

It already plans to forgo some social security measures, such as helping low-income earners with medical and nursing care expenses, to secure around ¥500 billion.

“Hundreds of billions of yen won’t just emerge like today or tomorrow,” Aso told a news conference. “We will take time until next year.”

A senior member of Komeito’s tax panel also said that a consensus document by both parties was unlikely to include specific measures to make up for the revenue loss.

Economic and Fiscal Policy Minister Akira Amari said the government could study the possibility of tapping tax revenue increases as a result of an economic recovery.

But Aso argued that tax revenue may decline in the future.

After the two parties failed to reach an accord on Thursday as planned, Chief Cabinet Secretary Yoshihide Suga urged them to swiftly conclude the talks.

The introduction of multiple tax rates “is a campaign pledge of the coalition government,” Suga told a news conference. “It is extremely important to obtain consensus.”