You're watching a live feed from the Office of Japan's Prime Minister Takaichi Sanae, who's about to speak to reporters on the consumption tax cut on food items.
Japan PM Takaichi Speaks to Reporters
Takaichi Talks on Consumption Tax Cut
PM Takaichi to Lower Consumption Tax on Food to 1% From April
00:00:12 話者 2/Takaichi Sanae
To the people affected and to those who have lost their family members.
Now I'd like to explain a little bit about what I have said at the meeting within our party.
I'd like to show you slide number one.
So I would like to look at the net burden on families, which are higher than other countries.
And I have been looking at people who have been suffering from higher prices as well as a social security burden, especially the mid- to low-income families, and I wanted to reduce
the burden.
And I have placed at the core the reduction of these burdens with tax reductions with benefits, and I have been talking about that often.
And during the election in February, I have talked about
reducing the consumption tax to zero for food for two years, and I have talked about accelerating this.
And I believe the expectation of the people is very high, and therefore in order to make sure that this lightening of the burden will happen fully and speedily, we want to make sure that We can realize this and we will make efforts with determination.
And yesterday, the Social Security National Council was held and the interim report was compiled.
If you can look at slide two, in three years' time, we will have benefits that is linked to income.
And the general direction of this has been agreed upon by the parties that have been part of the council.
So this will be different from a benefit that is paid out in lump sum to everybody.
We will be looking at this so that it will be linked to the income of each family.
And with this, the low- and middle-income families and also the current working families will see their burden become lightened.
And we will also reduce the number of people who will refrain from working because they need to consider the taxation hurdle.
Before this is fully introduced, in order to face the current high prices and also the burden of taxation and social security premiums, we will be looking at measures, and we have discussed ways to do this.
However, concrete ideas -- we were unable to come to an agreement on concrete ideas.
What is it that we need to do to reduce the people's burden?
What the best action, what would that be?
In the interim report, we have had a list of opinions from many of the parties and therefore, after fully considering this, I believe I have been able to select the best action and in the extraordinary
Executive Board meeting today, we were able to gain a consensus.
Therefore, I would like to report on that.
Today at the Board meeting, I said that an income-linked benefit introduction of this should be following the interim report of the National Council, and I wanted to make sure that we will be able to start this from 2029.
Until this is fully introduced, we want to make sure that this is carried out fully and speedily.
And therefore, at this point in time, the income information held at ministries and agencies will be utilized.
And so from 2027, we will be able to start introducing this.
And for food, the consumption tax
If it is 1%, rather than bringing it down to 0%, the system changes needed at the stores will be easier, and therefore we believe that we will be able to start this from 2027.
In the interim report, the chairperson's opinion as well as opinions of other parties have been included, but as you see on slide 3 here,
We want to make sure that all families will see their burden reduced.
And therefore, from 2027, for two years, we will reduce the consumption tax on food.
And then we will look at the low- and middle-income families which are suffering most, and we will have this income-linked benefit from 2029 April.
And also, at the same timing, the food consumption tax will be brought up once again to 8%, the income-linked benefit.
Until this is introduced, we will provide support to middle and low-income families, while as we bring back the consumption tax on food,
we will have the full-fledged benefits, and we want to make that predictable.
And therefore, we will look at this 1 percent.
From 2027 and onwards, we will start the benefits.
So in that way, we will cut the consumption tax on food
so that they will be effectively zero percent.
And I am hoping that we can get the understanding of the nation.
00:07:01 話者 3/Takaichi Sanae
In order to allow enough time for the businesses to prepare, we will start the consumption tax cut from April next year.
And in order to do that, we would like to have the government and the ruling coalition's policy by early August based on the chairperson's proposal and I made that instruction in the executive committee.
As for the issues pointed out in the interim report, first about the farmers who could not benefit from their tax break, we will evaluate the impact
and looking at the support measures implemented in the past, we will listen to the voices of the ruling coalition and with the government responsibility we will come up with actual measures to support these farmers in the budgeting process.
And secondly, as for restaurant business, we will evaluate the impact on them and then looking at support measures in the past, we will come up with budgeting measures to support these restaurants.
And then as for the funding sources, some people will say that it's not very clear, but we as the government is proposing to have the budget reform and the fully-fledged introduction of the refundable tax credit to be implemented in 2029 as well as for the stopgap measure for the two years according to the interim summary and report, we will secure the budget without relying upon the deficit covering government bonds to ensure market confidence.
And as we have already shown, the policy direction of the budget reform, we will look at the review of both the income as well as the spending so that in a stable manner we will continue to reduce the debt balance to GDP ratio.
And special taxation measures and funds and subsidies will also be reviewed.
And because of some special income this year, 2.0 trillion yen outside of the tax income, this will also be reviewed on the zero basis.
So throughout such a reform, we will ensure the funding source needed for this policy.
And as budgeting reform, we will move away from the supplementary.
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With the recent supplementary budget, the budget quite a big portion of that being posted for responding to higher prices that will also be reviewed in order to secure the funding for the stopgap measures.
And after I took the government in the budget process, we have accentuated the focus on certain items of the budget process, and this has been successfully done to reduce the new issuance of the government bonds.
So in the budgeting reform, we will appropriately control the issuance of the government bonds and we will have the full-fledged introduction of the refundable tax credit and stop gap measure with the secured funding.
And #4, as for the returning the tax rate back to 8%.
Some people are worried that it's not going to be possible, but some of the parties have said that a consumption tax is a very important source for social security.
And in order to ensure the sustainability of the finance as well as the market confidence, I will take my own responsibility to make sure that the tax rate will be returned to 8%.
When doing that, there is a concern that there may be an increased burden on the part of the people.
The rate returning to 8% from 1%, that would be starting from 2029, will be covered by the measures to reduce the burdens on the part of the low- to mid-income workers so that people can take more money back home.
And as you can see on slide number four, mid-income and low-income workers will receive support that exceeds the effect of the consumption tax cut on food.
So there should be no such concern.
And low-income persons who are willing to work. These people who require support will be identified thoroughly, and then we will come up with necessary measures to support these people.
And as much as possible, we will implement these measures by the time the fully fledged introduction of the refundable tax credit will start in 2029.
And these people who are elderly, people who are not working, We have the interim report saying that the existing system, including the pension system, will also be considered so that by 2030, when there will be another pension reform, it will be considered and we will make sure that no one will be left behind.
00:13:52 話者 2/Takaichi Sanae
So in between, we will be asking for a lot of ideas, and we have been asking for a lot of ideas, and many people said that benefits could be better and faster than reducing the consumption tax on food.
However, in order to have a benefit that is fair, We need to grasp the income made by high income families, spouses, and also to look at children 16 to 18 within a family who are dependent family members, and therefore after that only we will be able to fully introduce the system, and it will take time.
But the benefit in the past has been provided without the infrastructure, and therefore we did not have a system that is linked to income, and also the municipalities had to prepare very swiftly and quickly.
For example, last year and when we compiled the supplementary budget, the 20,000 yen per child to help the families raising children.
By the end of July this year, the actual benefit did not come out in some municipalities.
But we have pledged in the election in February, as well as feeling the expectation of the nation, we wanted to make sure that we can provide a full and big reduction in the consumption tax on food.
Among some ideas, there were some people who said that we should reduce the residence tax burden as well.
Totally looking at the social security burden on the low to mid-income families, yes, the direction can be agreed upon.
However, when we look at the local societies and when we think about reducing the residential tax in municipalities, as some mentioned in the National Council, 500,000 yen as deductible amount for independent people's residence tax, this may have a permanent effect.
And we need to look at this more fully, the food consumption tax reduction.
If we just do this, the local section for the consumption tax added together 1.6 trillion yen.
But if we look at the basic deduction of 500,000 yen, this will amount to 3 trillion yen in terms of resources.
And if we want to make this permanent, this is not something that we can do all of a sudden.
and the refundable tax credit that I've talked about.
The ideal would be that benefit and tax credit should be linked together, and we need to consider the future of this as well.
The food tax consumption reduction is the first tax reduction or consumption tax reduction since consumption taxes have been introduced here in Japan.
For big disasters or infectious diseases, pandemics, we have been considering that there is a necessity of being able to flexibly change the tax rate.
And therefore we will come up with a system that will make that possible.
This will be a new challenge for Japan and now the income-linked benefit and the plan for the interim.
will be decided early August as a policy for the government as well as the ruling parties.
And then we will have a basic plan in September and we will submit this to the extraordinary session of the Diet.
We are hoping that the burden on people suffering from high prices and social security and tax burdens will be reduced quickly.
And I'm hoping to gain the understanding of the nation.
So that is all from myself. Thank you very much.
00:18:58 話者 12
So now we'd like to take questions.
00:19:07 話者 13
From Nikkei newspaper.
So about the consumption tax cut on food, funding that is estimated to require 5 trillion yen.
Can you truly guarantee that this amount can be covered solely by reviewing special taxation measures and funds?
So for two years, can you guarantee the funding?
And if the funding cannot be secured as expected, can you guarantee with absolute certainty that there will be no shortfall in social security funding?
If income-linked benefits are also to be provided, can you secure a permanent funding source for that as well?
When do you plan to announce the details of this funding?
Given concerns over fiscal deterioration, the risk of depreciation and high prices, on what basis do you still believe that the consumption tax cut can ease the burden of the rising cost of living?
What legal framework or mechanism would ensure that the rate actually returns to its original level after two years?
According to reports, you are considering including an economic contingency clause that would allow the tax cut period to be extended depending on economic condition at that time.
00:20:26 話者 3/
So in our discussion.
According to the policy shown in the chairperson draft, we will not be relying upon deficit covering government bonds to secure the funding.
And then as the policy of the budget reform, we have already demonstrated that we will look at the tax revenue and we will review both tax revenue as well as the spending.
And then the debt to GDP will be stably reduced.
And then that way, we will estimate how much funding can be secured.
And in terms of the review of the special taxation measures and the funds, we will continue to do that in a thorough manner.
we will have some income, which amounts to 9 trillion yen, which is outside of the tax income.
And we will try and secure the funding from the zero basis, the evaluation, so that we will be able to secure the funding for the refundable tax credit as well as the stopgap measure.
And as budget reform will move away from the supplementary budget process and this has been clarified and the supplementary budget has been posted in order to address the rising prices but, the refundable tax credit and a stopgap measure will respond to the price hike.
Therefore, we will review the supplementary budget as well.
And in this big framework of the budget reform, throughout the year we will appropriately control the issue amount of the deficit covering government bonds and
including the stopgap measure and refundable tax credit, we will make sure to respond to the funding source's securement.
Therefore, I do not believe that there will be a shortfall in the social security money.
And in the budget process, we will show you the details of how to secure the budget.
And in two years, in terms of the rate, the parties which took part in the National Council
all said that consumption tax is an important funding source for social security.
We need to ensure market confidence.
Therefore, in two years, under my responsibility, I will make sure to return the rate back to the original rate.
And then in 2029, when the consumption tax rate is returned to the original rate, we will have the fully-fledged introduction of a refundable tax credit.
for low- to mid-income workers to reduce their burden.
And we will make sure that they can have more take-home pay, mid- to long-term, mid- to low-income workers.
they will be able to receive a support that exceeds the tax cut benefit as shown in the slide.
And then we will also have the income-based refundable tax credit and those people who are willing to work, low-income people as well as the elderly people.
They will receive benefits based on their income as well as from the social security perspective, they will never be left behind.
So that will be delivering government support to these people.
And then income-based benefits also will be legally secured, and this will be considered, therefore, the bill to be submitted to the diet in the future.
We do not believe that we need to have economic contingency close.
00:24:38 話者 14
Shimizu from NHK.
Yesterday, you attended the National Council, and the opposition parties said that cutting the consumption tax on food for two years may still be a big burden when you return the consumption tax.
So with the benefits that the opposition parties are calling for, where do you see the issue?
And also Obuchi, the former Election Strategy Committee chair, has left the LDP Research Commission on the tax system because she opposes.
And how will you deal with all these things in order to submit a bill?
Well, food and also daily supplies.
We need some measures in order to deal with the high prices.
And that was the main thing.
And right now here in Japan, the price increase, if we watch the trend, it's getting a bit better, especially food prices.
It's very high. It remains quite high.
Well, then why is it not benefits?
In the past, When we tried to hand out benefits, it took a long time until it reached the people.
So rather than that, reducing the consumption tax on food would be better for people who are struggling now and they will be able to feel the effect of these measures more quickly.
00:26:06 話者 2/
The basic system will be utilized in order to provide benefits.
If we try to start this from March, as some parties have indicated, an advance introduction will be done with the benefits that are linked to income.
In order to do this, we will utilize the information held by ministries and agencies right now.
And then after that, this will be introduced after the residential tax and others will be determined in June.
So the preparation period for the system vendors and for municipalities I believe they will need more time in order to do this, and I was also the internal affairs minister.
I do understand how difficult this could be the 100,000 yen cash benefit, it took a very long time until it reached all the people, and the municipalities had to carry a very heavy burden, workload for this,
and therefore, even now, what has been approved when we compiled the supplementary budget last year hasn't reached the people in some municipalities now.
So within the party, of course, as a responsible ruling party, we have said that we will reduce the consumption tax on food for two years, and we have said that we will accelerate the deliberation on this.
Therefore, the expectation of the nation was quite high and we have been able to push this through. We believe that a full reduction of consumption tax on...
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00:28:01 話者 99
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