Oppositions Join the National Council

The Centrist Reform Alliance (CRA), Komeito and the Constitutional Democratic Party of Japan (CDPJ) announced that they would participate in the National Council on Social Security, a discussion body chaired by Prime Minister Sanae Takaichi. The Democratic Party for the People (DPP) had already decided to join the council. With participation of major opposition parties, the council will intensively discuss reform of social security system and consumption tax cut. 

Established by Lower House members of Komeito and CDPJ, CRA has been reluctant to join Takaichi-led national council, arguing that she would attribute a predictable failure in implementing consumption tax cut to opposition parties, if they join it. Those three parties, however, decided to join the council to reflect their idea to government’s policies. The DPP also announced its participation with the same reason.

 

While Takaichi promised two-year moratorium of consumption tax cut on foods for two years in her campaign of Lower House election in February, the CRA argued that permanent elimination of the tax on foods would be needed. The DPP proposed halving the rate on all goods, from 10 percent to 5 percent, until wage hike exceeds price hike. There are fundamental differences on consumption tax cut among those three parties.

 

The CRA rather focuses on introduction of refundable tax credit (RTC), which is to refund consumption tax to low-income families. It was Democratic Party of Japan (DPJ), a precursor of CRA or CDPJ, that firstly proposed that policy, when its leader, Yoshihiko Noda, was the prime minister in 2012. Although the Liberal Democratic Party (LDP) led by Shinzo Abe rejected it at the time, Takaichi currently takes positive stance for RTC.

 

Since the time of DPJ administration, the government of Japan has been arguing that introduction of personal number system, such as social security number in the United States, to grab individual asset. Although Abe administration dismissed introduction of RTC, the government insisted on putting number on each person, naming that system My Number. Connecting My Number with personal bank account should be one of the issues to discuss in the national council.

 

The national council also established a subsidiary committee by twelve experts. The members include professors of universities, economists, business leaders or heads of local municipalities. Former president of Keio University, Atsushi Seike, chairs the committee. As consumption tax cut requires political decision, the experts are expected to mainly discuss introduction of RTC.

 

There has been a concern on connection between My Number and personal bank account of nationals. It was about exposure of individual asset to a governmental system. It is likely that the people in Japan has not given a full confidence to their government. That was the reason Komeito, then a coalition partner of the LDP, opposed RTC, when Abe instead introduced a lower tax rate for foods in 2018. It is not easy for Takaichi to settle the argument for these years.

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