EDITORIAL | PM Kishida's Policy Speech: Why Tax Cuts Now and Where Did National Security Go?

Prime Minister Fumio Kishida said that he is prepared to "bet his political life and work with all his might" in the policy speech he delivered at the extraordinary session of the Diet on Monday, October 23. He sought cooperation and understanding in dealing with various domestic and international issues. Those include the economic policies he pledged to focus on. 

The speech comes amidst increasingly harsh public scrutiny of the Kishida administration. Recently there were by-elections for both the House of Representatives and the House of Councillors. Liberal Democratic Party candidates won in the Nagasaki 4th district of the House of Representatives. But they lost in Tokushima and Kochi Upper House constituencies. 

What is required is for the prime minister to have a sincere attitude as he tackles the challenges the nation faces. Furthermore, he must have the ability to communicate his efforts to the public in an easy-to-understand way. 

Kishida did not adequately demonstrate the ability to do that in his speech. The question now becomes how he can go about demonstrating his leadership through the parliamentary debate. 

Ensuring the Security of the Nation

Most lacking were references to national security, the foundation of our country's prosperity. Tensions in the Middle East are running high and Russia's aggression in Ukraine has become protracted. Moreover, in Japan's own backyard, there are growing threats from China and North Korea.

The prime minister was correct in noting that the post-Cold War period has ended and we have entered a new era of major change. The problem is that he has communicated no clear strategies for dealing with the situation. 

China is determined to annex Taiwan, even if that requires the use of force. Its economic intimidation of other nations is also unacceptable. Meanwhile, the prime minister called for the removal of the unjustified embargo on Japanese marine products. Yet he did not explicitly criticize Beijing's hegemonic behavior. 

It is not enough to possess counterattack capabilities or improve the ability of Japan's defense forces to sustain combat. Those alone do not achieve drastic strengthening of the nation's defenses. It is also necessary to establish a comprehensive system in anticipation of emergencies. That must include infrastructure in the form of airports, ports, and shelters, as well as provisions for economic security. To accomplish that, we must seek further understanding from the public. 

Leadership For Constitutional Revisions

On constitutional reform, Kishida said, "I look forward to active discussions" to "finalize the proposed text of the articles." The prime minister has announced that he is determined to see the constitution revised during his term as LDP president. That term ends next September 2024. 

For that to happen, the draft needs to be broadly finalized during this session of the Diet. As president of the ruling Liberal-Democratic Party (LDP), Kishida should lead the debate on constitutional reform.

The prime minister also referred to measures for a stable succession to the throne. This is something he had not mentioned in earlier policy speeches and policy statements. He called for a "consensus of the legislative branch" to be reached at an early date. 

As with constitutional reform, we would like to see Kishida display leadership in preserving the history of the imperial lineage. It is a lineage that has long been based on a male (patrilineal) line of succession. 

Regarding the issue of the abductions of Japanese citizens by North Korea, the prime minister stated that his government would promote high-level consultations under the direct supervision of the prime minister. He added that "decisions will be made based on the big picture." With victims and members of their families aging, there is an urgent need to break the ongoing impasse.

More Than The Economy

Kishida's refrain of "the economy, the economy, the economy" and his pronounced emphasis on economic policy in his speech were questionable. His aim is for a complete break from cost-cutting economics. Kishida called for "strengthening supply capacity" and "giving back to the people" as the dual tracks for stimulating the economy. He also promised that his government would formulate comprehensive economic measures to embody these policies in the near future. 

The economy is improving after the worst of the COVID-19 disaster. The long-standing chronic malady of insufficient demand has almost disappeared. In addition, wage increases are becoming extremely common. Strengthening supply chain capacity is a measure to prevent this trend from reversing itself. 

Labor productivity must be increased to eliminate labor shortages and raise wages. 

Mr Kishida has set a three-year time frame for reform. He said he intends among other things to increase investment tax reductions as well as tax cuts to encourage wage increases. The question is whether the most effective measures will be taken.

No Time for Pandering to Public Opinion

There is a problem, however, with the tax cuts to be made to the people. The idea, proponents say, is to ease the burden temporarily because wage increases are not keeping pace with the high prices of goods. Yoichi Miyazawa, chairman of the LDP's Research Commission on the Tax System, has stated that "one year would be quite appropriate" for the duration of the tax cut. The government is also considering special benefit measures for low-income groups.

But we need to ask some hard questions before rushing into action. How much of a need is there really for cutting income taxes as the economy recovers? 

It makes sense to focus measures against high prices to provide relief to low-income groups that are struggling. But it is hard to see a reason for tax cuts that extend benefits to higher-income groups as well. 

We already have uniform subsidies and other programs to alleviate the high cost of gasoline. So now do we need to cut taxes for a wide range of people?

We also should determine the actual impact of the proposed measures. Could these tax cuts end up going to savings rather than consumption? Is there any danger that tax cuts would instead encourage inflation? 

There is also a lack of immediacy if implementation will not occur until the next fiscal year after the law is revised. 

Clear Answers and Meaningful Decisions

The prime minister must provide clear answers to these questions. If his explanations are inadequate, the tax cuts will be seen as a handout to curry favor with the public. 

Discussions on increasing the tax burden will be unavoidable as spending increases due to the strengthening of Japan's Self-Defense Force and declining births. Some in the ruling party believe that the prime minister does not want to be ridiculed with the moniker "tax hiker who wears glasses" on the Internet.

If "giving back to the people" is merely a measure to that end, we should recognize that the government will never gain the public's trust.

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(Read the editorial in Japanese.)

Author: Editorial Board, The Sankei Shimbun