Koichi Hagiuda, the Liberal Democratic Party's executive acting secretary general, hinted at the possibility that the planned consumption tax hike from 8 percent to 10 percent in October could be delayed depending on the results of the Bank of Japan's quarterly Tankan survey for June, which will be announced in July.
"We have to look at the June figures carefully and if it seems there's risk ahead, we can't lead the public over a cliff," said the close aide of Prime Minister Shinzo Abe in an internet program on Thursday. "I think there are other ways [besides the tax hike]."
In response to Hagiuda's remark, Chief Cabinet Secretary Yoshihide Suga told reporters Thursday, "We will raise the tax rate in October as planned, unless an event on the scale of the Lehman shock occurs," citing the global economic crisis caused by the collapse of U.S. investment bank Lehman Brothers.
Suga also rejected Hagiuda's idea of using the Tankan report as a yardstick, saying, "It's completely different from what [the government] has been saying."
Akio Mimura, chairman of the Japan Chamber of Commerce and Industry, criticized Hagiuda's remark as "incomprehensible" at a routine press conference on Thursday.
Mimura said the current balance of taxes and social security "is unsustainable in the long term," and that the government "shouldn't give up on [the consumption tax hike] merely due to modest near-term fluctuations in the economy."
'No time' for delay
Hagiuda has served as deputy chief cabinet secretary in a past Abe administration and is known as a close aide to the prime minister.
In the internet show, Hagiuda said of the prospects for the consumption tax hike: "We've been working hard to achieve economic recovery. If the economy stalls at the halfway mark, people may say, 'What's the point of adopting the tax hike?'"
Some lawmakers believe Hagiuda's comment reflects an ulterior motive, as postponing the tax hike is difficult in reality.
The government plans to offer free higher education and free education and day care services for preschool children by allocating increased tax revenue from the tax hike. If the tax hike is delayed, the government must push back those plans or issue additional national bonds.
The government has urged retailers to upgrade cash registers to deal with the reduced tax rate system that will be introduced along with the consumption tax increase. As a result, a last-minute postponement of the tax hike could cause confusion and a backlash.
"We've made various preparations, and [the Diet] has passed the budget. It's no time to [delay the tax hike]," said Noritoshi Ishida, chairman of Komeito's Policy Research Council, at a press conference on Thursday at the Prime Minister's Office.
On Friday, Hagiuda told reporters, "[The comment] was my personal view as a politician. I didn't mean to disapprove of government policy."
He also said he did not confer with Abe ahead of making the remark.
Read more from The Japan News at https://japannews.yomiuri.co.jp/
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