Japan PM Rules Out Sales Tax Hike to Fund Families, Defense

Japanese Prime Minister Fumio Kishida said he has no intention for now to raise the sales tax as his government sets off on a plan to boost military spending and provide financial incentives to help reverse a falling birthrate.
Kishida also said in a group interview with reporters on Thursday it was important for the world that the US and China keep their ties stable. China is expected to be a major topic on the agenda when Japan hosts a summit of Group of Seven leaders next month, with the US pressing allies to coordinate against economic coercion from the likes of Beijing. 
The prime minister has said the period to 2030 is the “last chance” to reverse a declining birthrate that threatens Japan’s long-term economic prospects. He has vowed to double spending on children and families in a bid to halt a trend he has said threatens the country’s ability to function. 
Japan has the developed world’s highest public debt load and spends more than 20% of its annual budget servicing the national debt. While the government still has a target of balancing the budget after debt servicing by the end of fiscal 2025, Kishida has continued to ramp up spending plans.
When asked about how he could fund some of these programs, Kishida said: “We have to carefully proceed with discussions regarding the funding as well, but as to your question about sales tax, we are not thinking of touching it for the time being.”
The government has also yet to clarify how it will finance a pledged ramp-up in spending on defense amid heightened tensions over regional security amplified by Russia’s war in Ukraine and North Korea’s barrage of missile launches.
While Japan’s sales tax at a maximum of 10% is relatively low by international standards, raising it has typically upended the economy, making the ruling coalition reluctant to resort to further increases.
So far government figures for how part of the extra spending on defense will be funded have drawn on reserve funds, generating concern about the sustainability of the increased outlays.
Kishida also said the international community relied on steady relations between the US and China as he readies for the G-7 summit in his hometown of Hiroshima.
The world’s two largest economies have struggled to restore communications following the US shooting down of an alleged Chinese spy balloon in February. 
G-7 foreign ministers at a meeting in the Japanese mountain resort of Karuizawa this week said they recognized the importance of “engaging candidly” with China, while calling for a “peaceful resolution” of Taiwan-related issues. They urged China to abstain from threats and coercion and said legitimate interests of foreign companies should be protected. 
The group also expressed concern about China’s growing nuclear arsenal and called for talks with the US on arms control.
China made a formal complaint to a senior Japanese diplomat over “negative comments” at the foreign ministers’ meeting, Beijing’s foreign ministry said in a statement.
“For our country and for international society, it is important that US-China relations be stable,” Kishida said, reiterating a call for China to behave as a “responsible major nation.”
Kishida also made the following remarks:
  • Asked why Japan has yet to recognize same-sex marriage, unlike its G-7 counterparts, Kishida said: “I want to consider public opinion, debate in parliament, and developments with lawsuits, as well as the partnership systems introduced by local governments.” “I want to deepen debate in this parliament,” he added.
  • Asked about the implications of a pipe-bomb attack on him as he prepared to give an election speech last weekend, Kishida said there should be a review of security ahead of the G-7 summit in May. “We must make preparations so that people can visit Japan without anxiety,” he said. He added that there should be more discussion about the appropriate distance to be kept between politicians and voters.

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