LDP eyes no consumption tax on food in election platform

TOKYO — Japan's ruling Liberal Democratic Party will pledge to consider suspending the consumption tax on food in its platform for an expected general election to be called by Prime Minister Sanae Takaichi, a senior executive said Sunday.

Shunichi Suzuki, secretary general of the Liberal Democratic Party, said during a TV program that the party's basic stance is to "sincerely follow through on the coalition agreement" with the Japan Innovation Party, in which the two agreed to consider legal steps to suspend the tax on food for two years.

Japan's consumption tax is set at 8 percent for food and beverages and at 10 percent for most other products. Ahead of the House of Representatives election, likely to be held on Feb. 8, the issue of lowering the tax rate has become a focal point.

The Centrist Reform Alliance, a new opposition force formed by the largest opposition Constitutional Democratic Party of Japan and the Komeito party, in contrast, is looking to scrap the consumption tax on food permanently.

"We will aim to secure the necessary funding to ensure that the tax rate on food will remain at zero for good," Komeito Secretary General Makoto Nishida told reporters after appearing on the program aired by public broadcaster NHK.

Takaichi, who leads the LDP, is expected to dissolve the lower house at the start of the 150-day regular parliamentary session from Friday, seeking to take advantage of her high public support to secure more seats in the chamber in which the ruling camp barely holds a majority.

The alliance of the CDPJ and Komeito, which only recently ended its decades-old coalition with the LDP and is backed by Japan's largest lay Buddhist organization Soka Gakkai, has created uncertainty, with the ruling party no longer able to count on its support.

"The new party will make our anti-inflation measures visible, including on cutting the consumption tax," CDPJ Secretary General Jun Azumi told the program, criticizing the ruling coalition's measures to tackle inflation as "ineffective."

The yen's depreciation against its major counterparts, a key factor accelerating inflation, has shown little sign of pausing as markets expect more fiscal spending under Takaichi, who assumed office in October. Long-term government bond yields have surged, partly because of concern about a deterioration of the country's fiscal health, the worst among advanced economies.

Takaichi's predecessor took a cautious stance on reducing the consumption tax rate, noting the revenue was intended to cover ballooning social security costs.

JIP co-leader Fumitake Fujita said during the program it is "out of the question" to reduce tax rates and increase fiscal spending without limits, adding financial markets are "very sensitive" about what Japan would do.

"We must boost fiscal spending responsibly while at the same time reforming how we spend in a responsible manner," he said.

Editor: Story has been updated with further details and comments.

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