- Consumption Tax Cut
- Supplementary Budget
- Keidanren's strategy to achieve a science and technology-oriented nation
- Japan-China Relations
- Japan-Russia Relations
- Passing of Toshifumi Suzuki
- Resignation of Yomiuri Giants Manager Abe
Consumption Tax Cut
(In response to a question about whether sufficient discussions are being held at the National Council on Social Security regarding Prime Minister Takaichi's proposed consumption tax cut, given the range of views reflected in public opinion polls) Keidanren's position on cutting the consumption tax remains the same as we have consistently communicated. Specifically, we have argued that thorough discussions at the National Council on Social Security are essential, while remaining fully mindful that the consumption tax has long been positioned as an important and stable source of revenue underpinning the social security system. We understand that discussions are in fact proceeding in that direction. In considering a consumption tax cut, clearly identifying alternative sources of revenue is a fundamental precondition for maintaining market confidence and ensuring the sustainability of the social security system. We are aware that a proposal to lower the consumption tax rate to 1 percent has also emerged. Even in that case, Keidanren's position remains unchanged because although the scale of the tax cut would be smaller than a reduction to 0 percent, it would still require enormous fiscal resources. Some have also noted that the operational impact would be different in nature from that of a reduction to 0 percent, but the extent to which the actual operational burden would be eased should be assessed with full consideration of the views of the industries concerned. In addition, the interaction with refundable tax credits and related issues should continue to be fully discussed and examined at the National Council on Social Security.
(In response to a further question suggesting that the impact of a consumption tax cut on the tax system as a whole and the question of alternative revenue sources are not being discussed at the National Council on Social Security) We understand that discussions on the scale of the fiscal resources required for a consumption tax cut, as well as its administrative and operational implications for the government and the industries concerned, have already been conducted in earlier rounds. At the same time, heightened tensions in the Middle East are giving rise to signs of inflation, and with a significant risk of further acceleration, I sense Prime Minister Takaichi's strong resolve to cut the consumption tax. Against this backdrop, we understand that discussions at the National Council on Social Security are ongoing.
Supplementary Budget
(In response to a question about his views on the supplementary budget that Prime Minister Takaichi has announced plans to compile, including relief for electricity and gas bills, and on funding considerations, including the additional issuance of special deficit-financing government bonds) In the wake of heightened tensions in the Middle East, the political and economic focus is on how to address inflation affecting both business activity and people's daily lives. The situation has reached a difficult juncture, and we view the announcement of this supplementary budget as a decision aimed at minimizing various risks. On the fiscal side, the government has stated that the total amount of special deficit-financing bonds placed in the market will not be increased and that it will steadily reduce the ratio of outstanding government debt to GDP, while continuing to closely monitor day-to-day market trends and economic indicators. I see this as a message that reflects an awareness of the need to ensure fiscal sustainability and maintain market confidence. That said, this must not be a one-time message. It is essential for the government to continue communicating this point regularly going forward.
(In response to a question about whether the so-called gasoline subsidy should be continued) In response to heightened tensions in the Middle East, emergency price-mitigation measures to hold the nationwide average gasoline price at 170 yen per liter have been in place from an early stage. We understand that, under the supplementary budget as well, the government intends to respond appropriately so that economic activity and people's daily lives are not disrupted. With respect to oil and oil-related products, we strongly commend the government's efforts, in cooperation with the private sector, to secure alternative sources of supply. At the same time, even if sufficient volumes can be secured, price increases will likely be unavoidable. Even so, this supplementary budget appears to reflect a desire to mitigate the impact on business activity and people's daily lives as much as possible and to sustain economic activity.
(In response to a further question about whether the rise in crude oil prices should be taken as an opportunity to pursue energy transition and other measures) From a medium- to long-term perspective, it is essential to steadily advance the green transformation (GX) strategy, beginning with the steps that can be taken now. We see the promotion of GX, including expanded use of nuclear power and renewable energy, as a way to open up a path forward for Japan, also from the perspectives of economic security, industrial siting, and the revitalization of regional economies. Japan's GX is supported not only by funds raised through Japan Climate Transition Bonds but also by multi-year support that effectively anticipates the multi-year budget measures currently being pursued by the Takaichi administration. In addition, Japan's GX is recognized internationally for pursuing economic growth and decarbonization in tandem, and it will remain important to structurally reduce excessive dependence on fossil fuels.
(In response to a further question about the view expressed by some economists that the so-called gasoline subsidy lacks economic rationality because it also benefits high-income earners) Continuing to hold the nationwide average gasoline price at 170 yen per liter places a very heavy burden on public finances. If we assume that turmoil in the Middle East will be prolonged, we must also take into account that stabilizing market prices will take a corresponding amount of time. In that context, when the fiscal burden is taken into account, the measure to hold the nationwide average gasoline price at 170 yen per liter should not be permanent. Rather, it should be implemented with a defined time frame in mind.
Keidanren's strategy to achieve a science and technology-oriented nation
(In response to a question about expectations for next fiscal year's budget regarding the virtually doubling of research funding announced by Prime Minister Takaichi during her meeting with the Chairman on May 13) Prime Minister Takaichi's announcement is highly encouraging. I sensed that Prime Minister Takaichi was positioning growth-oriented investment as a policy priority, mindful of Keidanren's longstanding call to double KAKENHI (Grants-in-Aid for Scientific Research) at the earliest possible date and with due regard for the importance of basic research. We have not yet been informed in detail of what Prime Minister Takaichi means specifically by the virtually doubling of research funding. In any event, at a time when fiscal flexibility is gradually diminishing, we are heartened by the strategic and forward-looking message toward realizing the science and technology powerhouse that Keidanren advocates.
Japan-China Relations
(In response to a question about how to assess the brief contact between Minister of Economy, Trade and Industry Akazawa and China's Minister of Commerce Wang Wentao at the APEC Ministers Responsible for Trade Meeting held in China, and about developments in economic exchanges) We are aware that Minister Akazawa had an opportunity to speak briefly with Commerce Minister Wang Wentao at the APEC Ministers Responsible for Trade Meeting. We do not believe this alone will transform Japan-China relations overnight, but the steady accumulation of small steps toward improved relations is important. From that perspective, we welcome the fact that the two ministers were able to make contact, even briefly, at the important forum of the APEC Ministers Responsible for Trade Meeting.
As for economic exchanges, we are still unable to meet with senior Chinese officials. That said, we understand that working-level exchanges are taking place on a relatively small scale, including visits to observe China's cutting-edge technologies. We see significant value in steadily building up such opportunities, which promote people-to-people travel and exchanges between Japan and China.
Japan-Russia Relations
(In response to a question about Keidanren's involvement in, assessment of, and expectations regarding the visit to Russia by officials including the Director-General of the Trade Policy Bureau of the Ministry of Economy, Trade and Industry) As Russia's invasion of Ukraine has become prolonged, the assets of Japanese companies that had been operating in Russia have remained in place. For this reason, it is important to preserve the assets of Japanese companies that remain in Russia, and we understand that the purpose of this visit is to call for the establishment of an environment that supports business continuity. An executive officer from the Keidanren Secretariat is visiting in Russia. Although various sanctions have been imposed in response to Russia's invasion of Ukraine, and we do not expect those sanctions to be lifted or progress toward peace to be achieved overnight, we hope that Japan-Russia economic relations will move toward normalization.
Passing of Toshifumi Suzuki
(In response to a question, following the passing of Toshifumi Suzuki of Seven & i Holdings, about any personal interactions with him during his lifetime) Mr. Suzuki and I were of different generations, so I never had the opportunity to interact with him personally. I can only say that his passing is deeply regrettable. I regard him as a figure who made extraordinary achievements and contributions to the development of Japan's retail and distribution industry, particularly to the prosperity that the supermarket sector continues to enjoy today and to the global presence Japan's convenience store industry has come to command. He also made a significant contribution to Japan's economic growth, people's lives, and greater convenience in daily life. From 1997 to 2001, he also served as a Vice Chairman of Keidanren, and I hold him in deep respect. I would like to extend my heartfelt condolences.
Resignation of Yomiuri Giants Manager Abe
(In response to a question about reactions to the resignation of Yomiuri Giants Manager Abe and the implications for Nippon Professional Baseball (NPB) interleague play, which is sponsored by Nippon Life, where Chairman Tsutsui spent his career) Honestly, I was surprised. As manager of the Yomiuri Giants, a prestigious club with a long history, his resignation is highly regrettable. NPB interleague play has built up a considerable history of its own and is, in our view, an important asset for Japanese sports. Nippon Life has long sponsored interleague play out of the conviction that it not only strengthens each team's ties with its local community but also serves as a source of vitality for society. While this matter is most unfortunate, it should be considered separately from Nippon Life's sponsorship of interleague play.