LDP and CDP lawmaker groups propose 0% consumption tax on food
A group of lawmakers within the Liberal Democratic Party and one in the main opposition Constitutional Democratic Party of Japan are each planning to propose lowering the consumption tax on food products from the current 8% to 0% ahead of the Upper House election, amid price hikes.
The LDP's league on promoting expansionary fiscal policies decided on Thursday to submit a proposal to the government on permanently eliminating the consumption tax on food products to curb inflation and the impact of U.S. tariffs.
'U.S. President (Donald) Trump called value-added tax a nontariff barrier. We should reform the consumption tax, which has been considered a nontariff barrier,' said Hiroyuki Nakamura, a Lower House LDP lawmaker, referencing reports of Trump likening value-added tax systems to tariffs.
The group, which has 74 members, will submit its proposal 'as soon as possible,' said LDP Lower House Lawmaker Rintaro Ishibashi's office on Friday.
A 70-member group within the CDP proposed including a temporary cut of the consumption tax on food products to 0% 'for as long as inflation continues' in the party's campaign pledges in the Upper House election on Tuesday.
Reducing the tax to 0% is expected to result in a loss of up to ¥5 trillion in tax revenue annually, which could be covered by using redemption money from the Foreign Exchange Fund Special Account, according to the league led by CDP heavyweight Kenji Eda.
The league estimates that households with an annual income of less than ¥2 million will save ¥40,000 a year, and households with an annual income of over ¥15 million will save ¥70,000 a year.
The league will submit its proposal to party leader Yoshihiko Noda next week, CDP lawmaker Kazunori Yamanoi said on Friday.
Executive members of the parties have voiced reservations about slashing the consumption tax.
'Doesn't the discussion about lowering the consumption tax begin with talking about what funds can supplement it?' said LDP Secretary-General Hiroshi Moriyama on Sunday.
Former CDP head Yukiko Edano called such proposals 'irresponsible' as it would put future generations in debt.
'If you want to be a tax-cutting populist, go and make another party," said Edano on April 12.
Amid talks on introducing measures to counter inflation and U.S. tariffs, the government had considered preparing a supplementary budget but ultimately decided to use the emergency funds from the fiscal 2025 budget on Tuesday.
Calls for a consumption tax cut, however, are growing within the LDP's coalition partner, Komeito, and other major opposition parties.
Komeito chief Tetsuo Saito told reporters on April 11 that tax cuts would give households and mid- to small-size enterprises 'a sense of relief' and that 'all possibilities are on the table.'
The same day, Nippon Ishin no Kai submitted a proposal to the government to eliminate the consumption tax on food products. The party also proposed lowering the cost of rice, cutting the gasoline tax by about ¥25, lowering the social insurance premium fee for owners of small businesses and reducing the fee by ¥60,000 yearly for regular workers.
The Democratic Party for the People submitted a request to the government on April 10 to consider lowering the consumption tax on all products to 5%.
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