(Bloomberg) -- Prime Minister Fumio Kishida stood by plans to keep Japan’s sales tax at its current rate as opposition groups called for a cut, backing a policy they believe would build support in an election less than two weeks away.
Kishida argued at a debate among party leaders Monday that maintaining the current tax at its 10% rate was needed to fund social security. He also reiterated his stance that government bonds should be used for emergency funding to help the world’s third-largest economy recover from the Covid pandemic.
Yukio Edano, leader of the main opposition Constitutional Democratic Party, called for a cut in the consumption tax. He also backed an increase in the capital gains tax and a hike in taxes on wealthier individuals.
Polling over the weekend showed Kishida’s ruling Liberal Democratic Party leading ahead of the Oct. 31 election for control of the powerful House of Representatives. While the LDP coalition looks set to keep its majority, any significant drop in its seat total could hobble the prime minister who took office on Oct. 4, increasing the odds of him joining a long list of short-serving Japanese premiers.
Kishida repeated at Monday’s debate that growth and distribution of wealth were equally important aspects of his economic strategy. He said changes to the capital gains tax and corporate income tax were important areas for discussions on wealth distribution, but didn’t provide details on how to tackle them.
Many voters view the LDP, which has ruled Japan for all but four of the past 66 years, as offering the steadiest hand to guide security and economic policies. Almost 30% of respondents to a Kyodo News poll released Sunday said they planned to vote for the LDP in the proportional representation section of the election, compared with less than 10% for the CDP.
Kishida has focused his election pledges on building a “new capitalism,” in which the fruits of economic growth are spread more widely. Markets initially gave the plan a thumbs down, sending the Nikkei 225 Stock Average on its longest losing streak since 2009 at the start of this month.
The new prime minister has since distanced himself from an earlier proposal to increase a capital gains tax on securities investments following the market backlash.
©2021 Bloomberg L.P.
BNN Bloomberg Picks
Cathie Wood’s Ark loads up on Twitter as stock sputters
Toronto Mayor expects economic jolt as city staff prepare office return
Former CN, CP Rail exec Mark Wallace dies
Nasdaq partners with Amazon to move market trading to the cloud next year
Most manufacturers facing more acute labour shortage than last year: survey
Cyber Monday misses estimates on short supply, weak deals