• Jiji


Both the ruling and opposition camps in Japan are appealing to voters with their income redistribution and fiscal measures in their campaign pledges for the Oct. 31 general election.

They put a special emphasis on the measures as economic recovery from the novel coronavirus crisis is expected to be a big issue in the election for the House of Representatives, the lower chamber of the Diet, Japan's parliament. The campaign period for the poll kicked off on Tuesday.

The ruling Liberal Democratic Party's manifesto includes tax benefits for companies that actively raise wages and economic assistance to struggling nonregular workers. It also calls for investments in the areas of crisis management, such as disaster reduction, and promising technologies, including those related to robotics and semiconductors.

The measures are aimed at spurring a "positive cycle of growth and distribution," which Prime Minister Fumio Kishida has promised to achieve.

Komeito, the LDP's junior coalition partner, also features a redistribution policy, pledging to give ¥100,000 handouts to families with children up to their third year of high school.

Meanwhile, the Constitutional Democratic Party of Japan and other opposition parties are hitting back with their own drastic measures to support household finances, such as a cut in the consumption tax rate, which stands at 10% for most items.

The CDP, Nippon Ishin no Kai (Japan Innovation Party) and the Democratic Party for the People have proposed lowering the consumption tax rate temporarily to 5%, while the Japanese Communist Party is seeking a permanent reduction to the same level.

The Social Democratic Party has promised to suspend the consumption tax for three years, while Reiwa Shinsengumi aims to scrap the tax altogether.

Many opposition parties back cash handouts. For example, the CDP plans to give ¥120,000 per year to those in the low-income bracket, while the JCP suggests ¥100,000 per person for households suffering a decline in income.

Both the ruling and opposition camps call for redistribution because price-adjusted real wages have been sliding since around 2000, despite surging stock prices thanks to the Abenomics reflationist economic policy mix adopted by former Prime Minister Shinzo Abe, said Kazumasa Oguro, professor of public economics at Hosei University.

However, critics view the financial aid promised by both camps as extravagant spending to curry favor with voters, as both plan to issue more government bonds to finance their policies instead of raising taxes. Vice Finance Minister Koji Yano, a top Finance Ministry bureaucrat, recently wrote an article in a magazine slamming the policies.

Although opposition party pledges include more taxation for major corporations and wealthy people who benefited from Abenomics, discussions on such measures are far from active.

"It's fine to distribute money, but the government will have to raise taxes in the future, so parties should make clear how they plan to finance their policies," said Oguro, a former Finance Ministry official.

"There are slight differences among the parties, such as how long they plan to reduce the consumption tax and how they say they'll pay for it," he noted. "Voters must check them and choose carefully."

The manifestos of both ruling and opposition parties address "a mix of policies for times of emergency (amid the coronavirus crisis) and for ordinary times," said Shigeki Morinobu, research director at the Tokyo Foundation for Policy Research.

"In ordinary times, the government should draw a path to eliminating anxiety about the future through redistribution funded with stable resources," he said. "What's going on right now is a race for redistribution without funding."

The similarities in their calls for redistribution have not stopped parties from attacking each other's policies in a debate hosted by the Japan National Press Club on Monday.

Kishida argued that the opposition's plans to cut the consumption tax will lead to a decline in consumption spending as taxpayers wait for the tax reduction, and that the economy would suffer a blow if the tax cut is financed by corporate tax.

CDP leader Yukio Edano replied that the consumption tax rate must be lowered to spur consumption for at least three to five years. He added that the measure will be financed by issuing bonds as the coronavirus crisis is a "once-in-a-century crisis."

Meanwhile, Edano said that the ruling bloc's promises of redistribution cannot be achieved unless large companies are taxed at a higher rate, noting that smaller businesses have a heavier tax burden.

"The (LDP's) politics of benefiting large corporations ultimately won't change," he said.

Kishida responded by saying that taxation for large companies must be considered together with the strength of the overall economy.

"Usually in national elections, voters make evaluations of what the government has done, but Kishida called a snap election soon after taking office," political analyst Atsuo Ito said, adding that citizens have no choice but to vote based on expectations rather than accomplishments.

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