Japan's Upper House Elections I

Parties Campaign on Three Policy Differences


By Takuya Nishimura, APP Senior Fellow, Former Editorial Writer for The Hokkaido Shimbun. The views expressed by the author are his own and are not associated with The Hokkaido Shimbun.
You can find his blog, J Update here.
July 7, 2025. Special to Asia Policy Point

Japan’s Upper House election season opened on July 3 with the vote to take place on July 20. This election is overwhelmingly about two issues: support of families suffering from price inflation and international relations, specifically with the United States. In addition, the management of political funds by the leading Liberal Democratic Party (LDP) will be front and center for many voters.

Protection against price inflation has largely taken the form of a debate over the consumption tax. Voters are divided over possible measures to reduce price inflation – so the parties have focused on this issue. In an NHK poll in May, 38 percent of respondants favored a consumption tax cut, while just two percent fewer, 36 percent, supported the current consumption tax rate. Eighteen percent wanted to abolish the consumption tax altogether.

Several opposition parties would reduce or eliminate the tax. The Constitutional Democratic Party of Japan (CDPJ) proposes a zero percent consumption tax on food, which is their top priority. The leader of the CDPJ, Yoshihiko Noda, insists that the government can eliminate this part of the consumption tax without an impact on government finances that would compel the issuance of new government bonds.

In a debate featuring party leaders at the Japan National Press Club (JNPC) on July 2, Prime Minister Ishiba (the president of the LDP) asked Noda what financial resources would offset the consumption tax cut. Noda pointed to two areas: the surplus in the governmental funds that are reserved for special policy purposes and the foreign exchange fund special account. Noda also said that other, unspecified tax measures could be revised.

The CDPJ has estimated that eliminating the consumption tax on food would reduce tax revenues by five trillion yen a year. Noda said in February that his party had found a 7.8 trillion-yen surplus in governmental funds. He also argued that much more of the government’s profits in foreign exchange could be included in the government’s general account. And he asserted that the special purpose tax on wage increase would increase the government’s revenues by 0.7 trillion yen. In the CDPJ’s view, all these resources would make a consumption tax cut on food feasible.

Taking a different approach, the Democratic Party for the People (DPP) calls for halving consumption tax rate (from ten percent to five percent) on all goods on a time-limited basis. The cut would continue until the growth in workers’ wages exceeds consumer price inflation. But the party has not identified as specific budgetary resource for this tax reduction as what the CDPJ listed.

The Japan Communist Party (JCP) favors another route: reducing the consumption tax rate on all goods to five percent before taking it to zero. But the party has not announced when the consumption tax will be repealed. Reiwa Shinsengumi, a small party with liberal policies, says that the government can offset these rate cuts by raising other tax rates and issuing government bonds.

The Japan Innovation Party (Nippon Ishin-no Kai) does not look to the consumption tax rate to protect against the effects of inflation but rather focuses on reducing premium for social insurance.

In lieu of any changes to tax rates, the LDP and Komeito propose to distribute twenty thousand yen to everyone and an additional twenty thousand yen for each child or a low-income family. The parties dismiss consumption tax rate reductions as unviable. To that point, in the debate at the JNPC, the chief representative of Komeito, Tetsuo Saito, asked Noda about what would happen when the government resumes the current consumption tax rate, which in a sense becomes a tax increase. Noda did not provide a clear answer.

Turning to international relations, the opposition parties are critical of Ishiba’s management of foreign affairs. Just a few days before the start of election campaign, U.S. President Donald Trump expressed his frustration with the bilateral tariff negotiations between the U.S. and Japan. “Dear Mr. Japan, here’s the story: You’re going to pay a 25 percent on your cars,” said Trump. He also complained about the small amount of Japan’s imports of American rice, particularly given the rice shortage in the Japanese market.

In a mixed message yesterday, July 7, Trump sent a letter to Ishiba, saying that a 25 percent tariff on all Japanese goods would apply on August 1 unless the countries reach an agreement before then. Trump had previously set a deadline of July 9 for the conclusion of tariff negotiations, so his letter extends the negotiating timeline. Interestingly, the deadline is ten days after the election.

In the JNPC debate, Noda asked Ishiba how he planned to resolve these negotiations. Ishiba did not specify a way forward but stressed that Japan’s unique position as the biggest national investor and biggest job creator in the U.S. “The success of Nippon Steel’s acquisition of U.S. Steel means that they can deliver good products with their technology and U.S. Steel’s labor force. I think our position with the U.S. is more about investment than tariffs,” Ishiba said. When Noda recommended another summit talk with Trump as soon as possible, Ishiba simply repeated that he would protect the national interests of Japan.

The Trump administration has demanded that Japan increase its defense budget to cover the costs of expanding its military and of hosting the U.S. Armed Forces in Japan. At the JNPC debate, the Chairwoman of the Japan Communist Party, Tomoko Tamura, observed that a swollen military budget would not be compatible with social security policies. When Ishiba rejected Tamura’s argument for failing to recognize Japan’s security situation, Tamura accused Ishiba of ignoring suffering families.

On another foreign policy note, the debate covered Trump’s recent reference to the atomic bombing of Hiroshima and Nagasaki. Trump compared those events to the recent U.S. bombing of Iran’s nuclear facilities as tactics that ended a war. (In the case of Iran, a ceasefire would count as an ending.) Ishiba refrained from criticizing Trump. The Chief Representative of Komeito, Tetsuo Saito, rejected the comparison.

The greatest single reason for the LDP’s major defeat in the Lower House election last October was the party’s mismanagement of political funds. That weakness remains. Ishiba failed to reach a consensus with the opposition parties on the regulation of donations from companies and organizations during the ordinary session of the Diet. The issue surely will weigh in the voters’ decision later this month.

The opposition parties have different views on the question of political donations. The Japan Innovation Party urges a total ban on corporate and organizational donations, while the CDPJ would allow donations from some organizations. The DPP fundamentally opposes any ban on donations. As seen in their mistake of fielding multiple candidates in single-seat districts such as Nara, Shiga or Fukui, the fragmentation of the opposition parties may help the LDP.