Prime Minister Fumio Kishida took a leading role in discussions on securing financial resources to drastically boost defense spending, positioning the amount and the way to secure funds as non-negotiable while referring to "Japan's responsibility" to its ally, the United States, and friendly countries in Europe.
At a press conference on Friday, Kishida stressed that he wanted to present the tax hikes this year because "it is clear that the public will have to bear a burden in the future." The prime minister said he "wanted to present [the policy] in good faith and in a straightforward manner."
Two days prior to the press conference, Kishida held meetings behind the scenes with a veteran Diet member who was cautious about tax hikes.
"As the global security environment has worsened, Japan must also shoulder its fair share of the burden. The public needs to share the responsibility," he told the member, according to sources.
Opposition to tax hikes had been growing during meetings of the LDP's Research Commission on the Tax System.
The Diet member who met with Kishida on Wednesday was surprised by the prime minister's "extraordinary determination."
During a Japan-U.S. summit meeting in Phnom Penh on Nov. 13, Kishida told President Joe Biden that Japan would "increase security-related expenditures to a level equivalent to 2% of gross domestic product over the next five years," effectively making it difficult to turn back. Kishida followed up on that promise on Nov. 28 when he announced plans to achieve the 2% target by fiscal 2027 and on Dec. 8 he instructed the government to consider measures to increase tax revenues by approximately 1 trillion yen in fiscal 2027.
However, criticism swirled within the ruling Liberal Democratic Party that Kishida had acted "too hastily."
When discussions kicked off in the party's Research Commission on the Tax System, Kishida met separately with commission chair Yoichi Miyazawa, a member of the prime minister's party faction, and former LDP Secretary General Akira Amari, a senior member of the commission, in an attempt to find common ground.
Eventually, an agreement was reached in which the timing of the hikes was left unspecified in the ruling party's tax reform guidelines, which state the measures will be implemented at an "appropriate time" after 2024.
Although some opponents of the hikes saw the agreement as a win, a senior official of the Finance Ministry said: "There was no plan to raise taxes next fiscal year in the first place. The statement about the timing is within the scope of expectations."
A source close to the prime minister said: "[The outcome] scores higher than 9/10. We hope to put a lid on the issue and submit a bill by next summer. We can now hold our head high in the international community."
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