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In his first appearance for questions in the Upper House on Tuesday, Prime Minister Fumio Kishida defended his recent decision to backtrack on an earlier pledge to seek a change to the capital gains tax and offered little in the way of details on new policy measures, despite the looming Oct. 31 general election.

During last month’s Liberal Democratic Party presidential campaign, Kishida’s platform included an economic policy aimed at growth and redistribution as part of a larger plan to raise incomes by 2030. Seeking a capital gains tax, he said, would aid in distributing the benefits of economic growth. But in a policy speech Friday, Kishida omitted the idea and the plan itself, inviting criticism from the opposition.

“Where was the mention of the 2030 income doubling plan that you strongly advocated during the election for LDP president?” asked Tetsuro Fukuyama, secretary-general of the Constitutional Democratic Party of Japan, during the session. "You also dropped the idea for a stronger capital gains tax. Was that idea withdrawn due to pressure from within the LDP or the bureaucracy?"

Kishida replied by saying the capital gains tax proposal had been just one possible idea that would achieve his goal.

“What I said was that the basic direction of my economic policy is to raise income overall for a broad variety of people as a whole. A review of the tax on capital gains and dividends was just one option for the policy of distribution,” Kishida said.

The idea has faced opposition from industry groups, who warn of negative impacts on other parts of the economy.

“We clearly oppose strengthening the capital gains tax, which would greatly impede the supply of high-risk money and have a large impact on stock prices that are subject to taxes,” said Hiroshi Mikitani, head of the Japan Association of New Economy, an association of risk fund managers, in a statement Wednesday.

The Constitutional Democratic Party of Japan Secretary-General Tetsuro Fukuyama speaks at an Upper House session in Tokyo on Tuesday. | KYODO
The Constitutional Democratic Party of Japan Secretary-General Tetsuro Fukuyama speaks at an Upper House session in Tokyo on Tuesday. | KYODO

With COP26, a key United Nations climate change conference set to begin Oct. 31, and with Japan in the process of finalizing its 2030 energy mix plan, the prime minister also addressed the nation’s pledges to the international community on greenhouse gases.

Countries are obligated to go to COP26 with specific plans, including targets, to reduce their greenhouse gas emissions by 2030 as a step to meeting their commitments under the 2015 Paris Agreement, which seeks to limit global warming to 1.5 degrees Celsius by midcentury.

Japan has already announced a 2030 goal of cutting emissions 46% from 2013 levels, a target that has been criticized within and without the nation as insufficient to meet the Paris goal. But Kishida, responding to Fukuyama’s request that the government raise its ambition, said that the figure formally presented at the conference in Glasgow, Scotland, would be unchanged.

Regarding COVID-19, Hiroshige Seko, secretary-general of the LDP Upper House caucus, warned that a policy of waiting until the number of coronavirus infections reaches zero before reopening businesses would kill the economy. He asked the prime minister what the schedule is for relaxing restrictions on activities that require proof of vaccination.

Kishida replied that the government is working toward the smooth introduction of digital vaccine passports by the end of the year.

“As to the timing and contents of a detailed policy for relaxing restrictions on the movement of people at events, we will soon discuss technical demonstrations related to vaccine passports,” Kishida said.

Hiroshige Seko, the Liberal Democratic Party's Upper House secretary-general, speaks at a House of Councilors session in Tokyo on Tuesday. | KYODO
Hiroshige Seko, the Liberal Democratic Party’s Upper House secretary-general, speaks at a House of Councilors session in Tokyo on Tuesday. | KYODO

In a separate session in the Lower House on Tuesday, ruling and opposition party lawmakers grilled Kishida on his COVID-19, climate and energy policy plans. Japanese Communist Party leader Kazuo Shii called for a higher greenhouse gas emissions cut, nuclear power to be ended by 2030 and more use of renewable energy.

Kishida said that the energy plan for 2030 calls for renewables to account for between 36% and 38% of the electricity supply.

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