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Yomiuri Shimbun
3 days ago
- Business
- Yomiuri Shimbun
Wage Increases and Economic Growth: Take Measures to Boost Corporate Investment
To realize wage increases that will overcome rising prices, it is essential to strengthen the earning power of companies. In the ongoing House of Councillors election campaign, political parties should compete with each other on strategies to boost investment for that purpose. There is no question that large wage increases are necessary in the attempt to break the Japanese economy out of its long period of stagnation, also known as the 'lost 30 years.' However, while major listed companies have attained record earnings for four consecutive years, wage increases have not kept pace with rising prices. Real wages have been on a downward trend since spring 2022, in effect making the sense of stagnation more pronounced. Under such circumstances, political parties are competing with each other through their plans for tax cuts or cash handouts to ease the immediate burden on household budgets. The Constitutional Democratic Party of Japan and the Japan Innovation Party have proposed temporarily lowering the consumption tax rate on food to zero. The Liberal Democratic Party and Komeito have pledged to provide ¥40,000 in cash to every child and to adults in households that are exempt from residential tax, as well as ¥20,000 to other members of the public. However, these shortsighted measures will not be able to revive the Japanese economy. To expand the trend of wage increases, the economic pie for the distribution of wealth must be enlarged by achieving high economic growth. To that end, it is essential for companies to improve their earning power. It is companies themselves that play the main role in raising wages. What is required of the government is a policy that creates an environment conducive to wage increases. One of the reasons for the Japanese economy's stagnation is the lack of corporate investment. It will be necessary to present a strategy and outlook that will encourage investment. The world is undergoing a period of major change. The free trade system is being shaken by the high tariff policy of U.S. President Donald Trump's administration. China has been strengthening its hegemonic moves, and economic security is becoming more important. Under such circumstances, the LDP has identified key industries for the next 10 years and pledged bold investments in them. The CDPJ has proposed support for the domestic production of cloud systems and artificial intelligence. Aren't both of these strategies insufficient for navigating this period of major change? Political parties will be tested as to whether they can first show a broad direction Japan should take and then present concrete measures that will encourage a review of the supply chains and a return of manufacturing industries to Japan, among other changes. One of the main reasons why the Japanese economy is suffering from high prices is that the yen has been excessively depreciated for a prolonged period. Behind the yen's depreciated state is also a decline in national power. If the Japanese economy becomes strong by promoting investment, the yen's depreciation can be expected to ease. Reiwa Shinsengumi, Sanseito and others have advocated the abolition of the consumption tax. Consumption tax revenue amounts to about ¥25 trillion. It is a key tax that makes up about one-third of the nation's tax revenues, and its abolition would result in a loss of confidence in the government's finances. It would only serve to diminish the nation's strength. (From The Yomiuri Shimbun, July 17, 2025)
Yomiuri Shimbun
12-07-2025
- Business
- Yomiuri Shimbun
Key Campaign Pledges Carry Issue of Fiscal Resources; Concerns Rise over Handout, Tax Cut Funding Sources
For the House of Councillors election to be held on July 20, parties have put forward key campaign promises such as consumption tax rate cuts, cash handouts and reductions in social insurance premiums. They are touting the effectiveness of these measures as ways to combat high prices and revitalize the nation's economy. However, there are many issues to be addressed, such as securing the necessary funding and processes to implement such measures, but the debate has not yet deepened. Difficult to cover shortfalls 'Prices are rising, and smiles are disappearing from the dinner table. To restore them, we will temporarily abolish food items' consumption tax. We will implement responsible tax cuts,' Constitutional Democratic Party of Japan leader Yoshihiko Noda said during a campaign speech in front of JR Gifu Station on Friday. Lowering the consumption tax rate on food items to zero would result in a ¥5 trillion shortfall in tax revenue over one year, while lowering the consumption tax rate to 5% on all items would result in a ¥15 trillion shortfall. Abolishing the consumption tax entirely would result in a ¥30 trillion shortfall. The CDPJ has showed its policy to use surplus from national reserves funds and the Foreign Exchange Fund Special Account to cover the ¥5 trillion shortfall, and made this clear in its campaign pledge. But the Liberal Democratic Party has expressed skepticism over the idea, with LDP Election Strategy Committee Chairperson Seiji Kihara saying, 'There are funds in the reserves that cannot be tapped, such as those designated for decarbonization initiatives and the semiconductor field.' Part of the funds for the foreign exchange special account have already been allocated for the enhancement of defensive strength. A senior Finance Ministry official emphasized, 'If the special account is used as if it were a magic wand, we would be unable to manage when actual foreign exchange intervention is needed.' Outperformed tax revenue 'We won't make empty promises as a makeshift,' Prime Minister Shigeru Ishiba, who is also the LDP president, criticized pledges of consumption tax cuts during a campaign speech in Sendai on Friday. Even a pledge by the LDP and its junior coalition partner Komeito to provide ¥20,000 to most adults and ¥40,000 per child or per adult in households exempt from resident tax, in cash payments, would need more than ¥3 trillion. But fiscal resources for such a measure remain unclear. The LDP explains it does not seek issuance of deficit-covering bonds for the cash provision, and it will instead use the outperformed portion of the fiscal 2025 tax revenue. However, tax revenue is subject to economic conditions and therefore volatile. Moreover, half of the retained earnings after the fiscal year budget are closed, including outperformed tax revenue, and are required by law to be allocated for debt repayment. In fiscal 2024, the other half of the ¥2.2 trillion retained earnings were allocated to defense spending. In reality, there is little leeway to allocate funds for other purposes. The Democratic Party for the People and Reiwa Shinsengumi accept the idea of issuing deficit-covering bonds. But with long-term interest rates continuing to rise, interest payments on government bonds are expected to swell further, leaving a heavy burden on future generations. Burden on local governments Both tax cuts and cash provisions face challenges in terms of institutional design. The CDPJ is proposing a consumption tax cut starting in April next year, but in addition to the need to revise tax-related laws in the Diet, Ishiba said it will take 'one year' to make necessary modifications including changes to cash register systems used in stores and other outlets. Meanwhile, the government and ruling parties aim to get a supplementary budget approved to fund the handouts at the extraordinary session of the Diet in the autumn, with plans to begin disbursement by the end of the year by utilizing banking or postal saving accounts linked to personal identification My Numbers to receive public funds. However, as of the end of May, only 65% of individuals had registered for public funds receipt accounts. Every time the central government implements a cash provision program, such as the ¥100,000 handout to all citizens in 2020, local governments tasked to carry out the actual provision have faced a significant administrative burden. This time as well, concerns have emerged among local governments. 'The workload will not decrease, but rather will only increase,' Chiba Gov. Toshihito Kumagai said.
Yomiuri Shimbun
12-07-2025
- Politics
- Yomiuri Shimbun
Regional Revitalization: What Should be Done to Maintain Functions of Local Govts?
Local governments are facing many challenges, such as depopulation and preparation for large-scale disasters. However, it cannot be said that a light is being shined on these issues amid the House of Councillors election campaign. The ruling and opposition parties should compete on measures that look squarely at the reality of regional areas. Japan's population is declining by about 600,000 every year. Last year, a private panel of experts made headlines when it said that 744 municipalities could disappear in the future due to a decrease in the number of younger women. The outflow of people to urban areas is a serious problem for regional areas. In an effort to stem the outflow of young people, local governments are racking their brains for measures to combat such issues as the low birth rate, but only a limited number of them have had a significant impact with their efforts. In the first place, local governments will only get exhausted if they compete with each other for a small portion of the population. It is time for local governments to consider what they should be like in the future on the premise of a declining population. However, the proposals made by the ruling and opposition parties never seem to have a firm vision for the future of local governments. The ruling Liberal Democratic Party is proposing the promotion of living in two regions by traveling between urban and regional areas. However, the party has not presented any concrete measures to achieve this goal. Both the Constitutional Democratic Party of Japan and the Democratic Party for the People are calling for the transfer of authority and financial resources to local governments with the aim of an equal relationship with the central government. The central and local governments have so far been promoting decentralization with the theme that what can be done by local governments should be done by local governments. However, with the shrinking population, local governments can no longer afford to take on a variety of tasks. Doesn't the idea of promoting a decentralized system, proposed by the CDPJ and other parties, stick too much to conventional thinking? As a result of many municipalities merging in the Heisei era (1989-2019), their number in Japan has been almost halved from more than 3,200. While administrative efficiency has been improved, the population decreased further in areas located far from the central parts of administrative areas. If the population continues to decline, smaller municipalities will not be able to provide medical and nursing care. It could also become difficult to maintain administrative services such as garbage collection. In reality, in the field of nursing care insurance, there is a shortage of professional staff. There are many cases in which multiple municipalities have formed joint associations to cover their areas in conducting examinations to determine whether people require nursing care. In Hokkaido and elsewhere, it is reportedly becoming increasingly difficult to secure technical staff for surveying and restoring houses and roads when they are damaged by earthquakes. To maintain administrative functions with fewer staff, it is essential to promote digitalization. In the mid- to long-term, another option is to accelerate discussions on creating associations for public services to cover several municipality areas and further merging municipalities, while eliminating the adverse effects involving mergers. (From The Yomiuri Shimbun, July 12, 2025)
Yomiuri Shimbun
03-07-2025
- Business
- Yomiuri Shimbun
U.S. Tariffs Keep Ishiba on Back Foot During Leaders' Debate; Discontent with Ishiba over Tariff Negotiations, Other Issues Voiced
During a debate Wednesday ahead of the House of Councillors election, which is just weeks away, Prime Minister Shigeru Ishiba spent much of his time on the defensive over deadlocked tariff negotiations with the United States, as opposition party leaders upped the ante. Constitutional Democratic Party of Japan leader Yoshihiko Noda heaped additional pressure on Ishiba by underlining his party's pledge to reduce the consumption tax rate in a move designed to combat soaring consumer prices. At the start of the party leader debate, which was held at the Japan National Press Club in Chiyoda Ward, Tokyo, Noda lit the fuse by taking a swipe at the state of tariff negotiations between Tokyo and Washington. 'It looks like the government has been doing something, but the goalposts seem to be moving further and further away,' Noda said. Ishiba's expression stiffened at this comment. 'Japan is the world's largest investor nation in the United States, and we are the world's largest creator of jobs there,' Ishiba said, raising his voice. 'Our situation is very different from that of other countries.' U.S. President Donald Trump recently said it would be 'really hard' to reach a deal with Japan during the tariff negotiations and hinted that a levy of 30% to 35% could be slapped on imports from Japan. The issue of U.S. tariffs sparked heated exchanges among the leaders. Ishiba, who is president of the ruling Liberal Democratic Party, reiterated that Japan is important to the United States and insisted he would continue to 'protect Japanese national interests until the very end.' However, Ishiba did not mention any concrete proposals for making a breakthrough in the negotiations or touch on the prospects of progress on the issue. Ishiba also found himself on the back foot during the second half of the debate when an attendee asked how the government would respond if the United States went ahead and imposed tariffs of 30% to 35% on Japanese goods. 'We must ensure [the United States] understands our position,' was all Ishiba could muster as an answer. A time of 'peril' Opposition parties had previously refrained from lobbing criticism at the negotiations because they had shared the prime minister's position that the U.S. tariffs presented a 'peril for the nation.' However, Trump's ratcheting up of pressure on Japan has unleashed a growing wave of discontent toward and doubt about the prime minister. In February, Ishiba became the second world leader to hold a face-to-face summit meeting with Trump after he returned to the White House. Ishiba also held direct talks with Trump in June on the sidelines of the Group of Seven summit meeting in Canada, and the two leaders have spoken on the telephone. Ishiba has played up his personal relationship with Trump. However, during the debate, Japan Innovation Party leader Hirofumi Yoshimura, who is also Osaka governor, suggested that Ishiba had 'failed to build a close relationship' with Trump. Noda expressed skepticism about Japan's negotiation strategy. 'The government did not precisely limit the scope of the talks,' he said. 'It isn't even understood [on the U.S. side] that Japan is the biggest investor' in the United States. The CDPJ leader also called for Ishiba to break the deadlock through directs talks with Trump. 'It's better to resolve this by going straight to the highest level,' Noda said. Defense spending The Trump administration has expressed its view that U.S. allies in Asia, including Japan, need to increase their defense spending to 5% of gross domestic product. When asked about this issue by a member of the audience, Ishiba denied that Tokyo was being pushed around by Washington. 'There's been no demand for 5% or anything else,' Ishiba said. The scope of any such increase is 'a matter that Japan should decide, and we won't simply go along with it just because another nation tells us to.' Ishiba also brought up the CDPJ's pledge to 'abolish the unconstitutional parts' of security legislation that allows Japan to partially exercise the right of collective self-defense and that also strengthens cooperation between the Self-Defense Forces and the U.S. military. 'Which parts are unconstitutional, and why are they unconstitutional?' Ishiba asked Noda. However, Noda did not specify which clauses of the legislation violated the supreme law. 'We will examine that through hearings and other channels with the Defense Ministry and the U.S. government after we assume the reins of government,' Noda said. That response provoked a scoff of astonishment from Ishiba. 'If you're going to claim that it's unconstitutional, you need to show us before the election exactly which parts you mean,' Ishiba retorted.
Japan Today
03-07-2025
- Business
- Japan Today
Campaigning for Japan upper house election begins
A crowd listens to a candidate's speech in Kobe on Thursday, as official campaigning began for the July 20 House of Councillors election. Official campaigning began in Japan on Thursday for the July 20 House of Councillors election, a crucial test for Prime Minister Shigeru Ishiba and his minority government as voters struggle with the rising cost of living. Ishiba has set a goal for the ruling coalition of his Liberal Democratic Party and the Komeito party to retain its majority in the 248-member upper house, meaning it will need to win at least 50 seats in the upcoming race in which 125 seats are up for grabs. The target is seen as a relatively low hurdle for the ruling camp, which controlled the upper chamber before the election, although Ishiba, hit by low public support, has described it as not an easy undertaking. The main opposition Constitutional Democratic Party of Japan is aiming to deal another blow to the ruling coalition by depriving it of majority control of the upper chamber. The LDP-Komeito camp lost its majority in the more powerful House of Representatives last October. "We must ensure wage growth outpaces inflation, whatever it takes," Ishiba said during a stump speech in Kobe, western Japan, which this year marks the 30th anniversary of the magnitude-7.3 Great Hanshin Earthquake that killed more than 6,000 people in the region. Ishiba, who has promoted disaster prevention measures, stressed the importance of distributing cash handouts, as pledged by the LDP, calling it a step to help households cope with higher prices. The LDP chief vowed to deliver them by the end of the year. For the July 20 vote, over 520 people are expected to file their candidacies for the 125 seats -- 124 or half of the upper chamber and one to fill a vacancy in the other half. Of the total, 74 will be chosen in electoral districts and the remaining 50 through proportional representation. In Japan, half of the upper house members are replaced every three years. Each member serves six years. An emboldened opposition after the ruling coalition's defeat in the lower house election last year has made life harder for Ishiba, who has had to yield to opposition demands to ensure smooth parliamentary deliberations. With Ishiba's premiership at stake depending on the election outcome, eyes are on whether the opposition camp can broaden its appeal, particularly the Constitutional Democratic Party of Japan and the Democratic Party for the People that surged in strength after the October general election. A conservative populist party, Sanseito, is also in focus. "The government has not done anything effective," Yoshihiko Noda, the leader of the main opposition party, said in Miyazaki Prefecture, southwestern Japan, criticizing Ishiba's inaction on rising food prices. Noda's party is promising to reduce the consumption tax on food from the current 8 percent to zero for one year. Miyazaki is home to the constituency of an LDP lawmaker who was forced to resign as farm minister after a gaffe about rice that was deemed insensitive to the struggles of consumers. Pressure on household budgets is looming large, with both the ruling and opposition parties seeking to appease a frustrated public, though with different approaches. The LDP and Komeito have pledged to distribute 20,000 yen handouts per person to help ease the pain of inflation. In contrast, opposition forces are pushing to cut, suspend, or even abolish the consumption tax. With households hit by inflation, major political parties are promising to add impetus to the budding trend of wage hikes. Soaring rice prices have added to the recent bout of inflation driven by increased production costs, a headache for Ishiba. The election will give voters an opportunity to deliver a verdict on Ishiba's months-old government at a time when Japan is seeking to stave off U.S. President Donald Trump's threat of even higher tariffs on Japanese products through rounds of bilateral negotiations that appear to have hit an impasse. Ishiba, whose LDP has traditionally enjoyed support from agriculture groups, has vowed not to sacrifice the agriculture sector under U.S. pressure for more market access. © KYODO
