- Consumption Tax Reduction
- Exchange Rate Trends
- 2026 Spring Labor-Management Negotiations and Consultations
- House of Representatives Election
- Financial Misconduct at Prudential Life Insurance
Consumption Tax Reduction
(In response to a question about how to assess the fact that almost all ruling and opposition parties have made consumption tax reduction a campaign pledge and a central issue in the House of Representatives election) My view that the consumption tax is a crucial, stable source of revenue for social security remains unchanged. Taking full account of the way it has long been positioned politically, economically, and socially, thorough discussions in a future national council are necessary. When considering a consumption tax reduction, clarifying alternative revenue sources is an absolute prerequisite from the standpoints of maintaining market confidence and ensuring the sustainability of social security. A national council should be promptly established after the election to thoroughly discuss and examine how to structure alternative revenue sources, along with other issues such as system adaptations, impacts on small and medium-sized businesses, and the relationship with refundable tax credits.
(In response to a question about whether parties pledging consumption tax reductions have presented sufficient funding plans) I understand that Prime Minister Takaichi has mentioned several potential revenue sources and that other parties have also referred to funding measures. I strongly hope that parties with consumption tax reductions in their platforms will continue providing explanations that can maintain market confidence and win voters' understanding and acceptance. These matters should be thoroughly discussed and examined at the national council.
(In response to a question on the pros and cons of Prime Minister Takaichi's suggestion of reviewing special tax measures as a source of funding for the consumption tax reduction) Prime Minister Takaichi has implemented various budget and tax measures for the next fiscal year and is also aiming for a multi-year budgeting framework that enables flexible fiscal spending, all from the perspective of boldly advancing crisis management investment and growth investment to achieve a strong economy. I recognize that one of the key issues is how to ensure consistency between this direction of promoting growth strategies and the measures to secure funding for a consumption tax reduction. All special corporate tax measures related to promoting investment are important, but if the political decision is made to implement a consumption tax reduction, I want to approach the discussions with this point firmly in mind.
(In response to a further question about raising the corporate tax rate itself as an alternative source of revenue) Our FUTURE DESIGN 2040 policy proposal released in December 2024 mentions that when promoting integrated reform of the tax and social security systems, if thoroughly applying the ability-to-pay principle is not enough to secure revenue, we should consider a consumption tax hike and, along with it, corporations bearing their fair share of the burden. If, after careful discussion and examination at the future national council of how to secure alternative revenue for a consumption tax cut, the timeline for the cut, and its effects, the policy is established as appropriate, then I would have no objection to putting the issue of how corporations might increase their fair share of the burden on the table for consideration.
(In response to a question about the effects of a consumption tax reduction limited to food and beverages) If you look at consumption tax and value-added tax rates in various countries, the situation regarding reduced rates on food products differs. At this time, we have not been able to analyze in detail the effects of a consumption tax reduction limited just to food and beverages, but it would likely help support the livelihoods of low- and middle-income households in particular. On the other hand, in addition to the question of the timeline for implementing a tax cut limited to food and beverages, we must also fully examine what impact it would have on the price-setting behavior of small and medium-sized businesses, especially those in the food and drink industry. I believe that raising these and other issues at the national council for thorough discussion and examination will ultimately lead to market confidence from both domestic and international perspectives.
Exchange Rate Trends
(In response to a question about the assessment of the yen's rapid appreciation following reports of a rate check, and how to respond if dramatic exchange rate fluctuations occur during the election period) I am not aware of whether a rate check was conducted, but I take it positively that the excessive depreciation of the yen has been corrected to some extent. My understanding is that the assumed exchange rates on which companies are basing their business plans are currently set at roughly between 145 and 150 yen to the U.S. dollar. If the actual rate moves closer to this range and stabilizes, I believe it could also have a positive effect on easing high prices.
Even during the House of Representatives election period, given the turbulent global situation, it is necessary to keep a firm watch not only on diplomatic developments but also on market movements. In doing so, we should closely communicate with financial markets to maintain their confidence and monitor exchange rate fluctuations while bearing in mind that the world is watching political debates in Japan.
(In response to a question about medium- to long-term exchange rate trends) I believe future exchange rate movements will also be influenced by the direction of monetary policy in Japan and the U.S. While I expect the Bank of Japan to continue making timely and appropriate judgments, exchange rates can fluctuate depending on the direction of U.S. monetary policy. If exchange rates fluctuate sharply and the yen weakens excessively, foreign-exchange intervention would be appropriate as one possible measure. However, intervention is a temporary solution for cases of sharp market volatility, and it is more important to strengthen economic fundamentals themselves. To that end, it is necessary to establish the "investment-driven economy" that Keidanren advocates and raise the potential growth rate from a medium- to long-term perspective. I am confident this will lead to achieving an exchange rate that reflects the true strength of the Japanese economy.
2026 Spring Labor-Management Negotiations and Consultations
(In response to a question about why proactive distribution to workers is necessary in the transition to demand-pull inflation) I believe that under the deflation that lasted for over 30 years, companies were cautious about raising wages, including base pay increases, because they were too focused on distributing profits to shareholders and preserving employment for workers. However, Japan faces a major constraint in the form of labor supply shortages, and it is important to promote the employment of diverse talent. Against this backdrop, securing and retaining excellent human resources is a challenge for companies, and it has become even more necessary to enhance corporate value by promoting human resource development and human capital formation while making pay more attractive. I understand that investment in people, including wage increases, is now positioned within corporate growth strategies, and this leads the strong momentum in wage increases that we have seen recently.
Currently, the supply-demand gap in the Japanese economy as a whole has been nearly eliminated, but going forward it will also be important to strengthen supply capacity in line with increasing demand. To do this, we need to overcome the barrier of labor supply constraints by expanding investment in people as well as capital investment. From this perspective, the 2026 Report of the Special Committee on Management and Labor Policy positions consideration of base pay increases as the standard in wage negotiations, which I believe is of great significance in the transition to demand-pull inflation.
(In response to a question about the expected proportion of the base pay increase if the wage hike target through the 2026 spring labor-management negotiations is around 5 percent) According to data from JTUC-RENGO, my understanding is that base pay increases account for about 60 to 70 percent of wage hikes of 5 percent or more. Looking back at the past 30 years, there were times when base pay increases were not implemented, but it is important to firmly establish the recent trend of achieving wage hikes of 5 percent or more with base pay increases as the driving force. It is with this in mind that our 2026 report on management and labor policy calls for further entrenching the strong momentum for wage increases and defines consideration of base pay increases as the standard in wage negotiations. Through this year's spring labor-management negotiations and consultations, I hope to work toward having base pay increases implemented at as many companies as possible. Keidanren plans to hold lectures on the 2026 Report of the Special Committee on Management and Labor Policy in about 50 locations nationwide, including for small and medium-sized enterprises. Through these awareness-raising activities, we want to advocate for the importance of expanding investment in people amid labor supply constraints and contribute to achieving wage hikes driven by base pay increases.
House of Representatives Election
(In response to a question about what kind of debate is expected from the ruling and opposition parties in the election) I understand that Prime Minister Takaichi decided to dissolve the lower house in order to seek a public mandate on the merits of the various policies related to crisis management investment and growth investment that she has rapidly rolled out since taking office, as well as on the framework of the coalition government between the Liberal Democratic Party and the Japan Innovation Party. While debates are unfolding on measures to address high prices, which is a matter of great public interest, the debate appears to be tilting toward tax cuts and redistribution, narrowing the discussion to piecemeal solutions. On the other hand, I understand that voters also have a certain degree of interest in social security system reform. To dispel the public's anxieties about the future, I hope that a medium- to long-term discussion aimed at the integrated reform of tax, public finance, and social security from an overall-optimization perspective will also be included within the scope of this election debate.
(In response to a question about the official election announcement and the meeting with JTUC-RENGO, which effectively marks the start of the spring labor-management negotiations, happening on the same day) I ask our political leaders to be mindful of maintaining market confidence and ensuring that there is no political vacuum. After the election, I want them to promptly begin deliberations on next fiscal year's budget, and once deliberations are complete, to execute it swiftly. If it proves difficult to pass the budget for the next fiscal year within the current fiscal year, it is essential that sufficient stopgap measures are taken to prevent any disruption to public life and the economy. At the same time, amid the rapidly changing global situation, a firm watch over diplomatic affairs is essential, even during the election period.
The spring labor-management negotiations are ultimately a matter of negotiation, and while the start of the election period is unlikely to have a direct impact, there could be some influence given the historical relationships between political parties and labor unions. In the spring negotiations, we must approach the issue by focusing on what next year's wages should be from the standpoint of supporting the livelihoods of people, who are not only voters but also workers and citizens. We in the business community intend to keep this point in mind.
Financial Misconduct at Prudential Life Insurance
(In response to a question on Prudential Life Insurance defrauding its customers, and seeking the Chairman's views as a representative of the same industry) This is a matter concerning an individual company, and as I am not aware of all the details, I would like to refrain from commenting. However, from what I have seen in the news, this is an incident that could undermine trust in the life insurance industry. As a business person who has involved in this industry for a long time, I take it very seriously. I hope the company will address this incident sincerely and make every effort to restore trust, not just for itself, but for the life insurance industry as a whole.
Unfortunately, although the nature of each case is different, scandals have occurred that shake the industry's credibility, including at my company, Nippon Life Insurance Company. I would like to take this opportunity to apologize once again for the concern caused by the incident at Nippon Life Insurance Company that was reported last year.