Image Credits: www.asahi.com
On September 4th, Toshimitsu Motegi, the Secretary-General of the Liberal Democratic Party (LDP), made a notable announcement that diverges from the Kishida administration’s previously set policies. In a significant policy shift, Motegi declared his intention to suspend the planned defense tax hike and the additional insurance premiums earmarked for child-rearing support. Instead, he aims to address these financial burdens through alternative measures designed to secure necessary funds without imposing extra taxes.
Motegi outlined that while the objectives of enhancing national defense and bolstering childcare support remain crucial, the methods of financing these initiatives are set to change. He proposed leveraging non-tax revenues, specifically utilizing foreign currency assets from the “Foreign Exchange Fund Special Account,” to mitigate the impact of sudden exchange rate fluctuations. This approach represents a departure from the Kishida administration’s strategy of raising taxes to fund these critical areas.
Further emphasizing his commitment to fiscal responsibility, Motegi pledged to boost tax revenues through an ambitious growth strategy, ensuring that there would be no increase in tax rates. He set a clear benchmark for this strategy: if tangible results are not achieved within three years, the leadership will be held accountable.
In terms of economic and fiscal management, Motegi presented a bold agenda aimed at revitalizing Japan’s economy. He aims to elevate the nominal growth rate to the mid-2% range within the first year and then surpass it in the subsequent year. His strategy includes fostering positive real wage growth and creating conditions that would allow the government to declare an end to the deflationary cycle that has plagued Japan for the past three decades. This ambitious plan underscores Motegi’s determination to rejuvenate the Japanese economy while maintaining a commitment to fiscal prudence.