Japan PM Vows Consumption Tax Cut Without New Bond Issuance In Diet Speech

TOKYO, Oct 5 (NNN-Kyodo) -- Japanese Prime Minister Sanae Takaichi pledged in a policy speech Monday to cut the consumption tax on food products without issuing new bonds, seeking to gain market confidence, Kyodo News reported.

At the opening of the 69-day extraordinary Diet session, Takaichi also said her government will promote domestic investment by mapping out a five-year action plan by year-end, while expressing eagerness to enact legislation to reduce the number of House of Representatives seats.

The legislation, which would cut the consumption tax on food and beverages from 8 per cent to 1 per cent for two years beginning in April, is paired with cash benefits for middle- and low-income earners and is intended to "create even a little more room in household finances" amid inflation, Takaichi said.

"To ensure market confidence, we will secure funds without relying on (the issuance of) deficit-covering bonds, so please rest assured," she said, apparently mindful of concerns over further deterioration in Japan's fiscal health, already the worst among the Group of Seven nations.

In the February lower house election, both the ruling coalition of Takaichi's Liberal Democratic Party and its junior ally, the Japan Innovation Party, and most opposition parties made reducing or abolishing the consumption tax a major campaign pledge.

Opposition forces, however, have opposed the government's current tax-cut plan, arguing that, among other things, it would not provide immediate relief.

To build a "strong economy", Takaichi also stressed the need to promote investment in risk-management areas, such as economic security and cyber defence, and key industries, including artificial intelligence and semiconductors, under the new five-year plan.

Since Takaichi took office in October last year, her cabinet has enjoyed relatively high approval ratings. The LDP-JIP camp won a landslide victory in the February general election, securing far more than two-thirds of the lower chamber's 465 seats.

A two-thirds majority vote enables the lower house to override the rejection of a bill by the Senate, the less powerful upper house where the ruling bloc remains a minority.

The government is set to submit 21 bills during the session, including the tax-cut legislation. Among them are bills designed to diversify resource-poor Japan's sources of crude oil amid the Middle East conflict and to establish rules on land acquisition in areas important to national security.

A bill to reduce the number of lower house seats, carried over from the previous session that ended in late July, will be in focus. The ruling parties pledged to seek its enactment in their October 2025 coalition agreement, which helped Takaichi become prime minister.

The bill would automatically cut 45 seats from the lower house's proportional representation blocks if no conclusion is reached within a year after the law takes effect. Takaichi said she expects "thorough deliberations toward its realisation during the current session".

On the diplomatic front, she called China an "important neighbour" despite ongoing bilateral tensions and said Japan aims to build "constructive and stable" relations with Beijing, while stressing that Tokyo would "say what must be said and strongly urge responsible actions."

Takaichi, known for her hawkish security views, also touched on amending the pacifist Constitution, saying a revision earlier this year to the law governing constitutional referendums had "greatly advanced the conditions for the public to make their judgement." She expressed hopes for "constructive and active cross-party debates".

The Diet session, which runs through December 12, comes amid continued opposition fragmentation following the Centrist Reform Alliance's split last month after its crushing defeat in the February general election.

Its former members, however, form a unified parliamentary group that remains the largest opposition force in the lower chamber.

The CRA was founded in January by lower house lawmakers from the Constitutional Democratic Party of Japan and the Komeito party, the LDP's former coalition ally for 26 years.

Some opposition parties, such as the Democratic Party for the People, the Sanseito party and Team Mirai, have signalled their support for some elements of the ruling bloc's conservative policy agendas.

--NNN-KYODO