LDP Acting Secretary-General Yoshihisa Furukawa opposes consumption tax cut, emphasizes importance of fiscal space

In an interview with Jiji Press, Liberal Democratic Party Secretary-General Yoshihisa Furukawa (61) reiterated his opposition to the consumption tax cut led by Prime Minister Sanae Takaichi, saying, ``What we need in an era of climate change and infectious disease crises is fiscal space.'' Regarding the government's fiscal goal of ``a stable decline in the debt-to-GDP (gross domestic product) ratio,'' he said, ``The government should show what level it will achieve and by when.''

Consumption tax reduction, special provisions and transitional measures complicate business and consumers, fear of confusion

The government plans to approve a tax reform outline on the 15th, which includes reducing the consumption tax rate on food products to 1% for a limited period of two years. In August, Mr. Furukawa, who also serves as vice chairman of the party's tax system research committee, submitted a written opinion to tax research committee chairman Itsunori Onodera, calling for a reconsideration of the party's internal discussions. In an interview, he expressed concern, saying, ``Is it right to divert social security resources to counter high prices? If we can't restore the tax rate in two years, the foundation of social security will be shaken,'' and called for a reconsideration of measures to counter high prices that center on benefits.

He stated that the cause of the weaker yen and higher interest rates was, ``Ultimately, it is a wavering of confidence in Japan's public finances,'' adding, ``Based on fiscal democracy, we should have a thorough discussion, including the sources of revenue to make up for the revenue loss caused by the consumption tax cut.This is the first and foremost responsibility of politics.'' ``Successive Liberal Democratic Party governments have asked for the consumption tax to be paid, even though they knew it would be unpopular.I am objecting because I am a Liberal Democratic Party member,'' he explained.

Mr. Furukawa pointed out that we are entering an era of ``long emergency,'' in which crises such as armed conflict and global warming are linked together on a global scale. "The core of a country's ability to respond to a crisis is its fiscal surplus. If that surplus is lost, lives will be lost," he emphasized.

Regarding the government's decision to drop the target of achieving a single-year surplus in the primary balance (PB), which shows whether policy expenses can be covered by tax revenues, he said, ``From the market's perspective, it can't be helped that it appears as an abandonment of fiscal consolidation.''

He also mentioned that the total requested budget for the fiscal year 2027 general account has ballooned to more than 143 trillion yen, the largest ever, and expressed concern, saying, ``The market is watching closely to see if we can narrow it down to what is truly necessary.The situation is getting closer.''