Japan’s PM Kishida faces heat as Abe loyalists attack tax plan to fund higher defence spending
- Right-wing members of ruling LDP strongly oppose proposals for higher taxes, with one minister daring Kishida to sack her
- Kishida could compromise for fear of completely ostracising right wing and encouraging leadership challenge, analyst says
Sanae Takaichi, the economic security minister, refused to back down on Tuesday over her earlier criticism of Kishida’s proposals to increase corporate taxes by as much as 5 per cent, hike taxes on tobacco products, and divert funds earmarked for the reconstruction of parts of northeast Japan in the aftermath of the 2011 earthquake and tsunami disaster.
Takaichi said in a tweet on Saturday that she “could not understand the prime minister’s true intentions in making a statement that may chill mindsets over raising wages at this time”.
Three days later, she insisted she had not spoken out of turn. “The prime minister has the authority to appoint cabinet ministers, so if I am removed from office, that cannot be helped,” she said.
These comments are being perceived as a threat to Kishida, whose support rate has declined over the last year and is likely to lose additional backing – not least from the firmly pro-LDP business community – over plans for additional taxation.
Income from corporate taxes comes to around 14 trillion yen (US$10 billion) a year at present, and Kishida has said he hopes to be able to raise an additional 1 trillion yen a year through the additional levies.
The prime minister has said he wants to increase defence spending from 5.2 trillion yen a year at present to 6.5 trillion yen in 2023. In 2027, that figure will increase to 9 trillion yen, equivalent to 2 per cent of GDP.
While those on the nationalist wing of his party are in favour of greater defence spending, they are strongly opposed to taxing businesses to pay for it.
About 20 right-wing members of the LDP attended a meeting called by Lower House politicians Shuichi Takatori and Minoru Kiuchi on Tuesday, including Deputy Secretary General Hiroyuki Miyazawa and Mio Sugita, who serves as vice-minister for internal affairs, indicating the depth of opposition to Kishida’s proposals.
“It’s a slightly bizarre and seemingly contradictory move by the party’s right-wing factions,” said Koichi Nakano, a professor of politics at Tokyo’s Sophia University. “They certainly want more defence spending but they are adamantly against raising taxes to pay for it all.”
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“Abe’s position was that greater defence spending should not come from raising taxes but from greater government borrowing,” Nakano said. “Kishida has taken a very different position and those who are still loyal to the late Abe are resisting.”
Kishida defeated Takaichi in the LDP’s leadership election in 2021, but she could be positioning herself for a future challenge, Nakano added.
Challenges to his leadership are a test to Kishida, who is seen as a leader who seeks compromise in contrast to the firmer positions taken by other leaders, notably Abe.
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Nakano said he believed that ultimately, Kishida would give ground for fear of completely ostracising the right wing and encouraging a leadership challenge.
“I think he will try to pass on what is effectively a ticking time bomb, as successive governments have tended to do, and borrow in the short term to cover the immediate defence outlays but with an understanding that taxes will have to rise in the future,” he said.
That, however, would inevitably give him a new headache, Nakano pointed out.
“Kishida is becoming increasingly reliant on keeping the Ministry of Finance happy to stay in power,” he said. “The ministry hates the idea of further borrowing as it tries to balance the nation’s books, and this will now put Kishida firmly between the right wing of his own party and the ministry on the other side.”
