Japan’s Suga signals focus on protecting jobs, rules out sales tax cut

Japan's Chief Cabinet Secretary Yoshihide Suga repeated his caution over the idea to cut the sales tax from the current 10 per cent. PHOTO: REUTERS. Sketched by the Pan Pacific Agency.

TOKYO, Sep 5, 2020, Reuters. Japan’s Chief Cabinet Secretary Yoshihide Suga said on Saturday (Sept 5) the new prime minister must continue to protect companies and jobs, mainly through pay-outs and loans, to cushion the economic blow from the coronavirus pandemic, The Straits Times reported.

Mr Suga, a frontrunner to succeed Prime Minister Shinzo Abe in a leadership race later this month, repeated his caution over the idea, floated by some lawmakers, to cut the sales tax from the current 10 per cent to mitigate households’ pain from the pandemic.

“The sales tax is a necessary source of revenue to pay for Japan’s social welfare … I think the rate should be kept as it is,” Mr Suga told a television programme.

The pandemic has deepened recession in Japan, triggering the worst postwar economic slump in the second quarter as collapsing global and domestic demand hurt exports and corporate profits.

“What’s important now is to protect jobs and help companies continue with their businesses, mainly through pay-outs and loans,” Mr Suga said.

Mr Suga is widely expected to win the ruling Liberal Democratic Party’s (LDP) leadership election on Sept 14, which was set after Mr Abe’s decision last week to step down. The winner is virtually assured of becoming prime minister because of the LDP’s parliamentary majority.

Markets have been rife with speculation that Mr Suga, upon becoming prime minister, may call a snap election in coming months to solidify his political grip.

“What people want most from the government is to deal with the pandemic and create a safe environment to live,” Mr Suga said, when asked whether he would call an early snap election if he becomes Japan’s new leader.

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