Consumption Tax Cut is Back at the Forefront

The Extraordinary Session of the Diet Begins

By Takuya Nishimura, Senior Fellow, Asia Policy Point
Former editorial writer for the Hokkaido Shimbun
You can find his blog, J Update here.
October 5, 2026

An extraordinary session of the Diet was convoked on October 5 with closure scheduled for December 12. The top priority for Prime Minister Sanae Takaichi and the ruling Liberal Democratic Party (LDP) is a consumption tax cut that would begin in April 2027. However, Takaichi faces the headwind of a scandal inside her administration and reservations about her diplomatic skills.
 
Ordinarily, such a Diet session in the fall is to discuss a supplemental budget for the Japanese economy or for dealing with an unexpected event such as a natural disaster. However, Takaichi has no plans so far to submit a supplemental budget bill. Indeed, she previously declared that she would not propose any supplemental budget and would integrate all the budget items into an annual budget that begins every April. Forgoing a supplemental budget should improve the efficiency of private business activities by improving the predictability of government spending.
 
Hence a consumption tax cut is the focus of this session. The Takaichi Cabinet made an official decision on the tax cut in mid-September: it will seek to reduce the consumption tax rate on food from eight percent to one percent for two years starting next April. The government will also establish a new system to subsidize job-hunting efforts by low-income families, instead of a refundable tax credit.
 
The leading coalition, the LDP and its partner, the Japan Innovation Party (JIP), does not have a majority to pass the bill in the Upper House, forcing the two parties to seek some help from opposition parties. LDP and JIP expect Komeito, which left the Centrist Reform Alliance (CRA) in September, to vote yes on the consumption tax cut bill.
 
However, the situation among the opposition parties is extremely complicated. The CRA lawmakers who had joined the party from the Constitutional Democratic Party of Japan (CDPJ) have since established a new party, the Democratic Reform Association (DRA). The DRA and Komeito then have organized a parliamentary group in the Lower House. Although the CDPJ and Komeito have not launched a similar project in the Upper House and continue to work separately there, it is up to Komeito whether to take a position closer to the CDPJ or to the LDP on the consumption tax cut proposal.
 
In addition to enacting the consumption tax cut, the LDP/JIP coalition hopes to reduce the number of Diet seats. The JIP has been calling on the LDP to implement their agreement made in October 2025 to reduce the number of seats in the Lower House by ten percent. The two parties failed to pass such a bill in either the extraordinary session of last fall or the special session earlier this year. Several members of the LDP are skeptical of JIP’s hard push for seat reduction.
 
The seat reduction proposal has led to an unusual unification of the opposition parties because all 45 seats to be eliminated are in proportional districts of the Lower House and thus work against small parties. If the LDP and JIP decide to ignore opposition complaints and take advantage of their super majority in the Lower House to pass the seat reduction, Komeito may oppose the consumption tax cut bill in retaliation. A multi-partisan group of lawmakers, including some from the LDP, submitted their opinion to the council for election reform, which argued that the 45-seat reduction would be baseless.
 
Controlling the procedure in the Diet will be crucial for Takaichi, who is reluctant to join the Diet’s discussion of the bills. The newly appointed Chairman of the LDP Council on Diet Affairs, Hideki Murai, supports Takaichi’s hesitancy and may negotiate to reduce her appearances before the Committee on Budget. But if Murai fails, the opposition parties will be further emboldened to oppose the leading coalition.
 
The Committee on the Budget has been a venue for discussing political scandals. Weekly magazines have reported that, before taking the position as Minister of Agriculture, Forestry and Fisheries, Kazuo Yana threatened some municipalities in his electoral district with cuts to their road construction budgets. The mayors of those cities supported another candidate in the last election in February. Yana’s possible involvement can be interpreted as blackmailing political opponents.
 
Yana is one of the lawmakers who received kickbacks from a former Abe faction in the LDP. His punishment was exclusion from a leadership position in the LDP for six months. Nevertheless, Takaichi allowed him to return to the leadership group by appointing him as minister in her cabinet reshuffle in September. She must have thought the kickback scandal was over. However, in an Asahi Shimbun poll, 68 percent considered it a problem that Takaichi had begun to appoint lawmakers embroiled in the funding scandal to ministerial positions. Mishandling of the Yana scandal may affect Takaichi’s approval rating.

Takaichi’s limited diplomatic skills have also raised concerns. A member of the U.S. Marine Corps in Okinawa was arrested by Japanese police on suspicion of a robbery from and the murder of a Japanese woman. The government of Japan has expressed its extreme regret to the U.S. However, Takaichi has not taken the matter up with U.S. President Donald Trump. Takaichi once said (in what she must now recognize as a grave mistake) that Trump was the only person who could bring peace and prosperity to the world. If she remains wedded to this view, she will show her irresolution about protecting Japanese citizens, and her public image will deteriorate.
 
Takaichi still has not improved bilateral relations with China that resulted from her careless speech on the Taiwan contingency in the Diet last November. Some lawmakers are trying to normalize Japan-China relations. This is not within Takaichi’s repertoire. Her missteps in diplomacy will give challengers a window to consolidate their opposition to her reelection as the LDP president in the fall of 2027.

Japanese Budget Disquiet

Takaichi’s Unlimited Budget Request Causes Concern

By Takuya Nishimura, Senior Fellow, Asia Policy Point
Former editorial writer for the Hokkaido Shimbun
You can find his blog, J Update here.
September 7, 2026
 
Japan’s Finance Ministry (MOF) closed budget requests from the ministries for FY 2027 at the end of August. Because Prime Minister Sanae Takaichi removed the limits on requests for investments in projects that could contribute to economic growth, the total number of requests significantly exceeded last year’s. These expanded budget requests, suggesting that Japan wants to provide more economic stimulus, have made the markets uneasy, as seen in the steep rise of long-term bond yields. The United States has warned Japan to adjust its fiscal policy to stop, if not reverse, these increases.
 
The MOF wraps up budget requests for the coming fiscal year at the end of August every year. The ministry examines these requests and formulates an annual budget bill by December. The Diet discusses the bill in its ordinary session normally convoked in January. The leading parties hope to pass the budget bill by the end of March; the budget would then govern projects in April or thereafter.
 
If the government needs to spend more on unexpected events, for example, recovery from a natural disaster or support for urgent economic stimulus, the government will formulate a supplemental budget in the fall. Takaichi wants to abolish the supplemental budget process to make the level of governmental spending more predictable for businesses. It is likely that her approach reflects the views of the Ministry of Economy, Trade and Industry (METI), for which economic growth is everything.
 
Historically, an annual budget has been formulated based on MOF’s estimation of the government’s tax and other revenues over the next year. Embracing a well-known principle of “calculate income, regulate outgo,” the MOF allots portions of the expected revenue to every ministry. This allotment process effectively caps the budget request of each ministry. It is the reason the annual budget request is called a “ceiling.” Through the allotment process and the examination of budget requests, MOF controls government spending and has earned the status as “the most powerful ministry.”
 
METI-leaning Takaichi hopes to reform this system. Regardless of the estimate of next year’s revenue, she ordered each ministry to submit a budget request without regard to the ceiling, at least insofar as the ministry’s expenditures above ceiling would contribute to economic growth or crisis management. The Ministry of Defense made the largest ever request at 8.9 trillion yen for projects including the introduction of AI in command and control. METI increased its own requests to support businesses on AI, semiconductors, and robotics.
 
It is not strange that the total amount of budget requests hit a new record. It swelled to 143.06 trillion yen, exceeding the previous year’s total by 20.75 trillion yen. Uncapped requests for investment amounted to 12.17 trillion yen. The MOF explains that this amount is the sum of the annual budget and the supplemental budget in FY2027. However, the amount still exceeds the sum of these two budgets in FY2026, which was 140.61 trillion yen. There is no guarantee that the government will not need a supplemental budget for an unpredictable natural disaster next year.
 
The greatest concern, however, is Japan’s payments on its government bonds. The total estimated expenditures in FY 2027 for the redemption and payment of interest on outstanding government bonds is at a record high 36.63 trillion yen. With the recent trend of policy interest rate increases by the Bank of Japan (BOJ), the payments for government bonds are expected to increase. The assumed yield rate for government bonds is 3.8 percent in FY2027, 0.8 percentage points higher than in FY2026.
 
Concern about Japan’s lack of fiscal discipline was immediately reflected in the long-term bond market. Bond prices fall as yields rise. The ten-year government bond yield hit three percent, the highest level in the last thirty years. It happened on the next day when the MOF closed budget requests. Expectations that the BOJ would hike the policy interest rate that the rise in crude oil prices would increase price inflation also caused bond yields to go up and bond prices to drop.
 
A rise in the long-term bond yield in Japan can be linked to a similar rise in the U.S. longer-term bond rate. U.S. Secretary of Treasury Scott Bessent said on September 1 that he expected Japan to “do the right thing,” effectively pressuring the BOJ to raise the policy interest rate. Referring to the success of former prime minister Shinzo Abe’s reflationary policy in stimulating the Japanese economy, Bessent said that Japan “should actually let that run and stop the reflation” in his press conference after the G20 meeting of finance ministers and central bank chiefs in Asheville, North Carolina.  That is, Bessent implied, Japan should cease further stimulus and direct its fiscal policy toward lowering inflation.
 
A reflation policy typically consists of expansive fiscal policy and monetary easing. The Abe administration used this policy to get rid of deflation. It is obvious that the current problem of Japan’s economy is not deflation, but inflation. Nevertheless, Takaichi has decided that what was good for Abe will be good for her, and she is trying to mobilize the national budget for investments to spur even greater economic growth and to pressure the BOJ not to raise the policy interest rate. Her economic policy, called “Sanaenomics,” looks to be facing opposition from the markets and the U.S.

Takaichi Diet Lesson

Takaichi Realizes the Power of the Upper House

By Takuya Nishimura, Senior Fellow,  Asia Policy Point
Former editorial writer for the Hokkaido Shimbun
You can find his blog, J Update here.
March 29, 2026
 
A power play over Japan’s FY2026 budget bill resulted in a defeat for Prime Minister Sanae Takaichi by the opposition parties. The Liberal Democratic Party (LDP) announced on March 30 that it has given up its attempt to pass the budget bill before the end of March. The Cabinet was forced to submit to the Diet an interim budget bill to authorize spending for the beginning of FY2026. Despite this setback, Takaichi continues to be highly popular in recent polls.
 
Looking back at the past few months, Takaichi exercised her constitutional power and dissolved the Lower House on January 23. The House held a general election on February 8. Her decision was fundamentally surprising because the timing of the snap election put at risk passage of the annual budget bill, which must occur before the beginning of the next fiscal year on April 1. Takaichi nevertheless initiated the snap election to reinforce her political support before her approval rating fell.
 
The LDP’s sweeping victory in the election went beyond her expectation. Takaichi and her staff in Prime Minister’s Official Residence (Kantei) came to believe that they were invincible, able to make impossible possible. Takaichi called on the Diet to pass the budget bill before the fiscal year began. The LDP in the Lower House obliged; it passed the budget bill with only 59 hours of discussion, ignoring the established but unspoken agreement between the parties to discuss a budget bill for at least 80 hours.
 
This hard push by the leading party stirred anger in the opposition parties in the Upper House which still outnumber the LDP. The opposition held captive a few bills relating to the FY2026 budget. Two of them were the high school tuition bill and the free school lunch bill which were to take effect in April. These bills also needed to pass the Diet by the end of March.
 
The Committee on Education, Culture and Science in the Upper House was to discuss the bills. The chair of this committee is a member of the Constitutional Democratic Party of Japan (CDPJ), the biggest opposition party. The chairman delayed discussion of the bills at the request of the opposition parties who first wanted to thoroughly examine the qualifications of the Minister of Education, Yohei Matsumoto [松本 洋平], who had a history of extramarital affairs. The opposition parties threatened the LDP that they would scrap the two bills if the parties did not have enough time to discuss the budget bill in the Upper House.
 
The leading parties and opposition parties struck a deal in late March. The leading parties would give up on meeting the March 31 deadline for the FY2026 budget bill, allowing time in the Upper House for discussion for the bill in early April. In the meantime, there would be an interim budget bill for 11 days, by which time the Diet is expected to pass the budget. The opposition parties agreed to pass the related bills, including the high school tuition and school lunch bills by the end of March. Although media reports did not go into detail, the LDP leaders told Takaichi about the deal on March 23. But Takaishi still insisted on passage of the budget bill by the end of March.
 
Takaichi must have known of the LDP’s weakness in the Upper House and of the deal between the parties to pass the bills. In fact, the FY2026 budget bill includes an economic stimulus package. Any delay in the budget bill will frustrate voters who expected assistance in this time of price inflation. Takaichi and her staff mistakenly thought that the opposition parties, afraid of public annoyance, would not be so persistent in opposing the budget bill.
 
She and her staff miscalculated the anger of the opposition parties in the Upper House. An extraordinarily abbreviated discussion on the budget bill brought to the fore a fundamental concern about the existence of the chamber, which has been dubbed “a carbon copy of the Lower House.” Regardless of their positions as either leading or in opposition, the parties in the Upper House felt challenged about their raison d’etre.
 
As a matter of fact, the Upper House sometimes has played a crucial role in the history of the Japanese government. The Ryutaro Hashimoto administration fell to a minority government in the Upper House after a defeat in the 1998 election. On the advice of his mentor, former premier Noboru Takeshita, Hashimoto stepped down as prime minister even though he maintained a majority in the Lower House.
 
In 2007, Prime Minister Shinzo Abe believed that the LDP’s majority in the Lower House could overcome its minority position in the Upper House. The result was terrible. A cabinet reshuffling caught some ministers in scandals related to the mismanagement of political funds. When the Upper House blocked an anti-terrorism bill, Abe’s chronic disease returned, he could not attend a plenary sitting in the Diet, and he decided to resign.
 
Prime Minister Naoto Kan left office in 2011 because a bill to authorize government bonds to fund reconstruction after the East Japan Great Earthquake earlier that year could not pass the Upper House. He asked the LDP, which had a majority in the house, to pass the bill in return for his resignation. These episodes illustrate that the Upper House has the power to destroy an administration.
 
Despite her mismanagement of the budget bill, Takaichi remains highly popular in two polls. Nikkei Shimbun reported a 72 percent approval rating of Takaichi’s Cabinet. She also maintained a high rating in the Mainichi Shimbun poll with 58 percent approval. Although there is skepticism about her attitude to the Diet, a substantial share of respondents preferred her performance in her summit meeting with U.S. President Donald Trump. Her style of relying on popular opinion is still working and may continue for some time.

Japan's Ordinary Diet Session Ends

Japan’s PM Ishiba Survives the Ordinary Diet Session 2025


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.
June 23, 2025. Special to Asia Policy Point

The Ordinary Session of the Diet closed on June 22. Despite the Liberal Democratic Party’s (LDP’s) minority in the House of Representatives, Prime Minister Shigeru Ishiba survived: the Diet passed the FY2025 budget bill by the end of March, and Ishiba avoided a no-confidence resolution. As he had to make concessions to the opposition parties, Ishiba failed to complete parts of his agenda such as political funds control and the separate surname system. The vulnerability of Ishiba’s position may affect the coming Upper House election in July.

The recently concluded session was the first time in over thirty years that the leading parties had to deal with a minority government in the House of Representatives. The last time was in 1994 when an anti-LDP coalition led by Tsutomu Hata lost its majority when the Socialist Party’s seceded from the coalition government. In the ordinary session this year, the LDP and its partner Komeito were able to accommodate enough policy concerns of some opposition parties to gain a majority to pass the FY2025 budget. The budget was the critical issue in the first half of the session.

Although Ishiba was at first not able to find an opposition party to vote for the budget, the Japan Innovation Party (Nippon Ishin-no Kai) eventually offered a helping hand. This support came after Ishin, the LDP, and Komeito reached a deal to add support for high school tuition to the bill. The Diet enacted the bill in the nick of time, by the end of March when FY2024 ended.

Ishin’s co-leader in charge of Diet affairs, Seiji Maehara, who had been the head of a small party advocating free education before joining Ishin last October, paved the way for the deal. Maehara was a minister in the administration of Democratic Party of Japan (2009-2012) when Ishiba was the policy chief of the LDP, which was then an opposition party. Maehara and Ishiba had debated policy in the Diet and have maintained their personal relationship since then.

Maehara also played a key role in the second half of the ordinary session. It is not unusual for the opposition parties to consider a no-confidence resolution at the end of a session. Maehara blocked this adventure. As the leader of one of the major opposition parties, the Constitutional Democratic Party of Japan (CDPJ), Yoshihiko Noda, was reaching a final decision whether to move forward with the resolution, Maehara announced that he thought Ishiba would dissolve the Lower House and go to a double election of both Houses as soon as a no-confidence resolution bill was submitted.

The Constitution of Japan states that the prime minister must resign when the Diet passes a "non"-confidence resolution -- unless the Lower House is dissolved. Maehara said that Ishiba would immediately dissolve the Lower House as soon as a no-confidence resolution bill was submitted without waiting for a House vote on the resolution. The Constitution empowers the prime minister to dissolve the Lower House at any time.

Noda ultimately refrained from the submission of a no-confidence resolution bill, afraid of a political vacancy brought by the double election at a particularly uncertain time in Japan and the world. That is, the security situation in the Middle East is worsening, tariff negotiations with the Trump administration are dragging on, and rice prices in Japan are highly volatile.

Ishiba cannot be said to have been successful in pushing his agenda through the Diet session. He failed to make good on his promise to enact legislation on political donations from companies and organizations by the end of March. Five opposition parties and the LDP each submitted bills to revise the Political Funds Control Act. But none of them garnered majority support. The bill was postponed to the next session.

Other items fell by the wayside. The LDP could not conclude internal discussion over creating a separate surname system for married couples, although the opposition parties were ready for it. The party also failed to wrap up debate on stable succession to the Imperial Throne, an issue that the Speakers of both Houses had hoped to enact legislation by the end of this Diet session. The conservatives in the LDP were reluctant to change rules for surnames and royal succession.

The failures may affect the Upper House election, which will take place July 20. In the recent election of the Tokyo Metropolitan Assembly (June 22), the LDP lost a considerable number of seats due to voters’ complaints about mismanagement of political funds. In the absence of substantial support for the LDP, opposition parties were able to scoop up votes, but the results did not show that voters favored a particular party over the others. By all appearances, Ishiba has yet to establish a stable voter base for the Upper House elections, which will determine his administration’s fate. 

Ishiba Confronts Trumps Tariffs

Ishiba Builds His Team on Tariffs


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.
April 14, 2025. Special to Asia Policy Point

After the FY2025 budget was approved on March 31, Japan’s Prime Minister Shigeru Ishiba turned to dealing with the Trump Administration tariffs. While Ishiba has been organizing his negotiating team, the opposition parties have separately been calling for policies to support businesses and households. Their policy demands are designed to garner public support for the coming Upper House elections.

Ryosei Akazawa, the Economic Revitalization Minister, was named the top negotiator. He arrives in Washington April 16 for three days of meetings with U.S. officials who include Treasury Secretary Scott Bessent and U.S. Trade Representative Jamieson Greer. Akazawa’s mission is to have the Trump administration rethink its tariff policy. He will emphasize Japan’s role as the top foreign investor in the U.S.

Ishiba also launched a task force on U.S. tariff policy, co-headed by Akazawa and Chief Cabinet Secretary Yoshimasa Hayashi, in the general headquarters on tariffs in the Ishiba Cabinet. “Under the leadership of Akazawa and Hayashi, we will construct an all-Japan organization in which the officers work on negotiation with the U.S. and measures for domestic industries beyond the border of ministries,” said Ishiba at the announcement of the task force.

Ishiba is concerned not only about trade and domestic industries but also about foreign exchange. Trump has been complaining about the devaluation of the Japanese yen against the U.S. dollar. As a founder of a hedge fund, Bessent is an expert in foreign exchange. It is likely that the exchange rate will be one of the talking points in the negotiations between Japan and the U.S. later this week. The Minister of Finance, Katsunobu Kato, will lead the currency negotiations. Kato plans to visit Washington for the annual spring meetings of the International Monetary Fund and the World Bank later in April. Although his schedule has not fixed, Kato hopes to have a meeting with Bessent during his visit.

National security is another topic. Trump reiterated that the U.S.-Japan security treaty is unfair because the U.S. pays hundreds of billions of dollars to defend Japan, but Japan does not pay anything. The Ishiba administration will explain that the Japanese government has provided extensive host nation support for the U.S. Forces in Japan. In anticipation of this discussion, Ishiba has included National Security Advisor, Masataka Okano, in the taskforce. Trump seems unaware of Japan’s constitution that prohibits engaging in non-defense war fighting.

Rice will also be a priority topic in the negotiations. “We feel like we could have more and better agricultural market access,” said Greer in pre-negotiation remarks. Because rice is the staple food in Japan, the government strictly controls the rice trade inside the country. The U.S. argues that Japan’s rice trade is not transparent and hard for foreign countries to access. Although the Japanese government is reluctant to open its rice market, the recent price hikes of rice in Japan may increase demand for foreign rice.

It is inevitable that Trump’s tariffs will have a negative impact on the Japanese economy. Beyond the “reciprocal” tariffs, the 25 percent tariffs on cars and other specific products are certain to reduce exports from Japan to the U.S. “The greatest concern is about financing of small and mid-size entrepreneurs,” said the leader of the Constitutional Democratic Party of Japan (CDPJ), Yoshihiko Noda. All political parties in Japan share a common interest in supporting business sectors.

Meanwhile, the parties are fighting over how to help households: should there be a cash handout or a tax cut? On the one hand, cash handouts could be delivered soon after the Diet passes the supplemental budget, while tax cuts would be part of the perennial debate over tax reform. A decision on tax cuts could not be made until the end of this year. On the other hand, a tax cut is more helpful for the families than a cash handout since the cut would last for several years. A cash handout is a one-time event, which has limited and temporary effects.

The parties have different views. The Liberal Democratic Party is leaning toward a cash handout in the hope of immediate effects shortly before the elections. Its coalition partner, Komeito, is urging both a handout and a tax cut. The Democratic Party for the People is promoting reduction of the consumption tax rate from 10 percent to 5 percent. Reiwa Shinsengumi wants to abolish the consumption tax entirely. Noda is reluctant to cut the consumption tax, even though some members of his party support a tax cut.

All parties are motivated to deliver an economic stimulus plan in time for the Upper House election expected to be held in July. To do so, the Diet must pass a supplemental budget by the end of the current Diet session on June 22. Passing a budget bill is hard work for a minority government. Ishiba nevertheless plans to deliver an economic policy package, which may require a supplemental budget.

Japan's Budget Battle

Ishiba Achieved a Majority for the Budget Bill

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.
March 5, 2025. Special to Asia Policy Point

Japan’s House of Representatives (Lower House) passed the FY 2025 budget bill on March 4 with the backing of a Liberal Democratic Party (DPJ)-Komeito coalition and the Japan Innovation Party (Nippon Ishin-no Kai). Ishin’s cooperation was surprising, but welcome. Prime Minister Shigeru Ishiba, the head of a minority government, finally achieved a simple majority in the Lower House, which he had desperately wanted.

Although Ishin had reached a deal with the LDP and Komeito to include financial support for high school tuition in the bill, the party remained skeptical given the relatively small increase in the threshold for imposing an income tax from 1.03 million yen to 1.6 million yen. The Democratic Party for the People (DPP) rejected that increase as too small in its discussions with the LDP and Komeito.

Anxious about its consistently low public approval ratings since the Lower House election last October, Ishin has sought some political gains that would register with the public. Raising the government’s support for high school tuition is an important achievement for Ishin to promote in the upcoming July Upper House elections. However, Ishin’s cooperation with the leading coalition has divided the opposition parties between pro-LDP Ishin on one side and other parties, including the DPP, who want to distance themselves from the LDP-Komeito coalition.

The budget bill was sent from the Lower House to Upper House on March 4, two days after the targeted deadline on March 2 for automatic approval in the Upper House. Article 60 of the Constitution of Japan provides that a Lower House decision on a budget will automatically become the decision of the Diet, if the Upper House fails to act within 30 days of receiving the bill.

If the FY 2025 budget bill had passed the Lower House by March 2, then it could have automatically passed the Diet before the new 2025 fiscal year begins on April 1. With delay of two days, the LDP is planning to accelerate the discussion of the budget bill in the Upper House to enable it to vote by the end of March. Fortunately for the LDP, the LDP-Komeito coalition constitutes a majority in the Upper House. Ishin is likely to cooperate with the LDP to accelerate the discussion in the Upper House.

One of the reasons for the delay in passing the budget bill in the Lower House was a revived argument over the LDP’s slush fund scandal. The opposition parties demanded hearing testimony from a former accounting manager of Abe’s faction, Jun-ichiro Matsumoto, before they would vote on the budget bill. The LDP has yet to put this scandal behind it. Matsumoto, although reluctant to appear, he did.

Persuaded by LDP leaders that his testimony would help pave the way for the budget bill to pass the Lower House, Matsumoto accepted a hearing of Committee on Budget on February 27. In the closed meeting to the press, held in a room in Tokyo hotel, Matsumoto revealed that, after the fund had been scrapped, the faction revived it at the suggestion of a senior member.

Two unsolved mysteries in the slush fund scandal remain. One is when and who started the kickbacks from the sale of fundraising party tickets. Former Prime Minister Yoshiro Mori is suspected of being involved in the establishment of the system in the early 2000s, but former Prime Minister Fumio Kishida did not ask for any details when he interviewed Mori last year. Matsumoto did not know much about the origin of the kickbacks.

The second mystery is the identity of the person who introduced the idea of resuming the kickback system. The faction head at the time, Shinzo Abe, had abolished it in March 2022. Faction leaders restarted it in August 2022, one month after Abe was assassinated.

Matsumoto testified that, at a meeting in August 2022, one of the faction leaders had said that rank-and-file faction members supported resumption of the kickback system. According to Matsumoto, all four leaders of Abe faction -- Ryu Shionoya, Yasutoshi Nishimura, Hiroshige Seko, and Hakubun Shimomura – agreed to revive the system.

Matsumoto did not identify the leader who represented the faction members who favored the kickback system. However, the Asahi Shimbun reported that Matsumoto had told public prosecutors that the leader in question was Shimomura. Shimomura told Asahi, however, that he had not done so, but had only given information about the “feelings” in the faction. In Japan, “giving” information is not so different from “suggesting” it.

The opposition parties have now asked for testimony from the four leaders who were at the August 2022 meeting. While the budget bill is discussed in the Upper House, the parties will keep on negotiating over the scandal in the Lower House. This will not create a warm atmosphere for the Ishiba administration. 

Japanese Diet Politics

Ishiba Close to a Majority in the Diet

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.
February 23, 2025. Special to Asia Policy Point

Japan’s leading coalition in its Diet, the Liberal Democratic Party (LDP) and Komeito, is close to a deal with the Japan Innovation Party (Nippon Ishin-no Kai) to garner support for increasing support for high school tuition. This would give Shigeru Ishiba’s government a Diet majority to revise and pass its FY 2025 budget bill. Ishin’s support marks the first time that the LDP has achieved a majority with support from an opposition party in such a major issue as an annual budget, since it lost its majority in last October’s general election.

The leaders of the LDP, Komeito, and Ishin parties wrapped up a draft to eliminate the annual income cap (now set at 9.1 million yen) on eligibility for a family to receive 118 thousand yen for high school tuition. This provision would take effect in FY 2025. For students attending private high schools, which generally are more expensive than public schools, the government would pay a supplement of up to 457 thousand yen beginning in FY 2026. There would be no income cap on this supplement either.

At the behest of Ishin, the coalition also promised to increase support for scholarships for low-income families and to introduce free lunch in elementary schools beginning in FY 2026. These policies will cost approximately 550 billion yen. The government needs to add 200 billion yen of spendings to the FY 2025 budget. The rest of the 350 billion yen is supposed to be included in the FY 2026 budget. Subject to confirmation from Ishin, the House of Representatives will approve the budget by March 2, the effective deadline for the bill to pass the Diet before FY 2025 starts on April 1.

Getting majority approval in the Diet has been the top priority for the Ishiba administration since LDP’s October election defeat. Its coalition with Komeito looked for another partner to form a majority in the Lower House. Although the first possible partner was the Democratic Party for the People (DPP), their trilateral discussion was gridlocked with quarrels over raising the threshold for imposition of an income tax. The threshold is currently 1.03 million yen in family annual income.

While the LDP, Komeito, and DPP held discussions intermittently since last December, Ishin began separate negotiations with the LDP-Komeito coalition. The main negotiator for Ishin was its co-leader, Seiji Maehara, who joined the party just before last October’s election. Free education has been at the top of Maehara’s personal agenda.

Taking advantage of his personal relationship with Prime Minister Ishiba and LDP policy chief Itsunori Onodera, Maehara reached a deal with the LDP and Komeito. Ishin thus beat the DPP in the race to cooperate with the LDP and Komeito for control of the Diet. Together they will implement policies that will appeal to voters before this summer’s Upper House elections.

Seeming to have secured a majority for the budget bill in the Lower House, Ishiba has managed to avoid his first political crisis. Failure to pass the budget bill by the deadline could have been fatal to his administration. There are some historical examples in which a stalemate over the annual budget bill destroyed a cabinet, as seen in the Noboru Takeshita Cabinet with the Recruit Scandal in 1989 or in Tsutomu Hata’s minority government in 1994. Inability to pass a budget bill might also lead to calls in the leading party to replace the prime minister.

Ishiba still faces protests from the opposition parties on political reform. Although the opposition parties want a prohibition on political donations from private companies and organizations, these groups are the main donors to the LDP. Ishiba accordingly has opposed a complete ban. The LDP has promised to resolve the stand-off by the end of March.

To avoid a no-confidence resolution in the House of Representatives, which would cause political volatility, Ishiba hopes to attract as much support as possible from the opposition parties. His coalition with Komeito continues discussions with the DPP over an income tax break. The LDP-Komeito coalition simultaneously is negotiating with the biggest opposition party, the Constitutional Democratic Party of Japan.

An administration with a majority in both Houses does not have to discuss policies with the opposition. But the Ishiba administration is more vulnerable than any LDP administration in the past two decades. They must expend considerable time and energy on such discussions.

Japan's Stimulus Budget

An Uneasy Stimulus Package for Japan


By Takuya Nishimura, Chief Editorial Writer, The Hokkaido Shimbun
The views expressed by the author are his own and are not associated with The Hokkaido Shimbun

November 7, 2022

To prepare for the risk of worldwide economic decline, the Kishida administration announced in late October a new stimulus package amounting to ¥39 trillion ($264 billion). Hoping to ease the Japanese people’s growing anger over relentless price hikes, Prime Minister Fumio Kishida is offering families financial support for their utilities bills. However, it is not clear whether the new measures can keep up with the consistent inflation caused by the fall in the value of the Japanese yen. Meanwhile, disregarding widespread demands for economic stabilization, the Bank of Japan shows no sign of ending current efforts to ease monetary policy.

The administration argued that the Japanese economy is on its way to a normal condition after a significant slump caused by COVID-19 and the Russian invasion of Ukraine. Those events led to higher prices for international raw materials, while the plunging yen caused increases in the prices of energy and food products. The stimulus package aimed at moderating inflation and improving workers’ wages, by using the cheap yen to restore sales capacity.

The highest priority in the stimulus package is to moderate the unusual increase in commodity prices, a trend that other major economies in the world are also attempting to address. Japan’s stimulus package may be unique, however, in that is the government will subsidize household electricity and fuel bills through payments directly to those utilities rather than through payments to households. The government has explained the subsidies will result in a 20% reduction in the monthly electric power charges of an average family. The public is skeptical about whether the electric power companies pass the subsidies along through reductions in monthly charges, but the government has said that the reductions will be described on monthly bills. There remains the possibility that the stimulus package will be the salvation of electric corporations, without improving consumers’ purchasing power. The same can be said about gas prices.

Another key to economic revitalization is raising workers’ wages. While former administrations recognized the need for better wages, the financial benefits of tax cuts and programs for major corporations did not trickle down to small or mid-size businesses. And the wages of a majority of workers has remained low. The Kishida administration looks to be more aware of the problem than were its predecessors. The stimulus package will back small businesses on the condition that employee salaries rise. Companies will be penalized if they hesitate in reflecting governmental support on the price, or financial back-up for the companies suffered from COVID-19 or current inflation. But employers would not be required to sacrifice their businesses to get their employees to the proper wage level.

The rest of the policies in the package are politically motivated. Neo-capitalism is one of the pillars of Kishida’s policy. To promote investment in human capital, the package expands the budget for the next five years, creates a new system for “reskilling” and job transfer, removes expiration of the Nippon Individual Savings Account and improves the personal pension system. To improve job education, Japan will send one thousand young entrepreneurs to technology and finance centers in United States, including Silicon Valley and business districts in the east coast.

Subsidies for the construction of infrastructure is a traditional stimulus policy of any Liberal Democratic Party (LDP) administration because local constructors are fundamental supporters of the party. Firmly believing in Keynesian economics, the Kishida administration, as well as former LDP ones, will encourage improvements to the transportation system to better withstand disasters and will support the growth of a digital-transformation-friendly infrastructure. Finally, although the relationship to economic stimulus is unclear, the stimulus package also includes: support for the countries or regions affected by the Russian invasion of Ukraine; a fund for releasing into the sea the water used for cooling Fukushima’s damaged nuclear reactors; and security enhancements for G7 leaders meeting in Hiroshima next year.

On the same day that Kishida announced his new stimulus package, the Governor of the Bank of Japan (BoJ), Haruhiko Kuroda said in a press conference that the Bank will maintain its inflation targeting policy known as “yield curb control.” Kuroda then predicted that “Although commodity prices for consumers will keep rising through the end of this year, the speed of inflation will be slowed down by mid-2023.” The Governor’s term ends next April. Supposedly frustrated with slow progress in reaching the target 2% inflation rate, Kuroda insisted that the monetary policy should support a rise in workers’ wages. But the BoJ is not necessarily responsible for workers’ wages. News reports thus focused on who will be his successor.

Monday in Washington, April 15, 2019

2019 ARMS CONTROL ASSOCIATION ANNUAL MEETING. 4/15, 9:00am-3:30pm. Sponsor: Arms Control Association. Speakers: Ambassador Richard Burt, Former U.S. Diplomat and Negotiator on the Strategic Arms Reduction Treaty (START), and U.S. Chair, Global Zero; Thomas Countryman, Former Acting Undersecretary of State for Arms Control and International Security, and Chair of the Board, Arms Control Association; Joan Rohlfing, Chief Operating Officer, Nuclear Threat Initiative; Heather Hurlburt, Director of the New Models of Policy Change, New America; Ambassador Bonnie Jenkins, Founder of Women of Color Advancing Peace and Security (WCAPS), Member of the Arms Control Association Board of Directors; Admiral Michael Mullen, Former Chairman of the Joint Chiefs of Staff; Bonnie Docherty, Senior Researcher, Human Rights Watch, Arms Division; Erin Dumbacher, Program Officer for the Scientific and Technical Affair Program, Nuclear Threat Initiative (NTI); Amy Woolf, Specialist in Nuclear Weapons Policy, Congressional Research Service; Suzanne DiMaggio, Senior Fellow at Carnegie Endowment for International Peace; Frank Aum, Senior Expert on North Korea, United States Institute of Peace; Thomas Countryman, Chair of the Board, Arms Control Association; Sen. Chris Van Hollen (D-MA).

NEW RISKS AND NEW ARMS CONTROL SOLUTIONS: NORTH KOREA, DISRUPTIVE TECHNOLOGIES, AND THE NEW ARMS RACE. 4/15, 9:00am-3:30pm. Sponsor: Arms Control Association. Speaker: Senator Chris Van Hollen (D-MD).

DECIPHERING THE NAVY’S 2020 BUDGET REQUEST AND SHIPBUILDING PLAN. 4/15, Noon-1:00pm. Sponsor: Heritage Foundation. Speakers: Ronald O’Rourke, Specialist in Naval Affairs, Congressional Research Service; Eric Labs, Senior Analyst for Naval Force and Weapons, Congressional Budget Office; Bryan Clark, Senior Fellow, Center for Strategic and Budgetary Assessments; Jerry Hendrix, Vice President, Telemus Group; Bryan McGrath, Managing Director, The FerryBridge Group LLC; Thomas Callender, Senior Research Fellow for Defense Programs, Heritage Foundation.

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INSIDE THE MIND OF LASHKAR-E-TAYYABA. 4/15, 10:30am-Noon. Sponsor: Carnegie Endowment. Speakers: author, Christine Fair, Provost’s distinguished associate professor, Security Studies Program, Edmund A. Walsh School of Foreign Service, Georgetown University; Polly Nayak, distinguished fellow, South Asia Program, Stimson Center; Joshua T. White, associate professor, Practice of South Asia Studies and fellow, Edwin O. Reischauer Center for East Asia Studies, Johns Hopkins SAIS.

THE SHRINES OF ISE: ARCHITECTURE AS METAPHOR. 4/15, Noon-1:00pm. Sponsor: Library of Congress. Speaker: Jordan Sand, Professor of Japanese History and Culture, Georgetown University.

U.S. ENGAGEMENT IN ASIA: A CONVERSATION WITH SINGAPORE’S MINISTER OF FINANCE HENG SWEE KEAT. 4/15, 3:00-4:00pm. Sponsor: Brookings. Speakers: John R. Allen, President, Brookings; Heng Swee Keat, Minister of Finance, Republic of Singapore; Jonathan Stromseth, Lee Kuan Yew Chair in Southeast Asian Studies, and Senior Fellow, Foreign Policy, Center for East Asia Policy Studies, John L. Thornton China Center.

AN ACTION AGENDA FOR LEGAL PATHWAYS TO DEEP DECARBONIZATION IN THE UNITED STATES. 4/15, 3:30-5:30pm. Sponsor: Environmental Law Institute. Speakers: William K. Reilly, Former EPA Administrator; Scott Fulton, President, ELI; John C. Dernbach, Commonwealth Professor of Environmental Law and Sustainability, Widener University Commonwealth Law School; Michael B. Gerrard, Andrew Sabin Professor of Professional Practice, Columbia Law School; Kit Kennedy, Senior Director, Climate and Clean Energy Program, Natural Resources Defense Council; Peter Lehner, Senior Strategic Advisor and Senior Attorney, Earthjustice; Charles (Chuck) Sensiba, Partner, Troutman Sanders LLP; Moderator: Rachel Jean-Baptiste, Director of Communications & Publications, ELI.

BLOCKCHAIN 2035: THE DIGITAL DNA OF INTERNET 3.0. 4/15, 4:00-5:00pm. Sponsor: Institute of World Politics (IWP). Speakers: Jared C. Tate, Founder, DigiByte; Andrew D. Knapp, CEO and founder, VESTi Inc.

PRINCIPLED AGENTS: REFLECTIONS ON CENTRAL BANK INDEPENDENCE. 4/15, 5:30-6:45pm. Sponsor: Peterson Institute. Speaker: Lesetja Kganyago, Governor of South African Reserve Bank. Webcast.

Prime Minister of Japan's Schedule November 29 & 30

November 30, 2011

AM
09:30 The office of PM
09:31 Press interview

11:55 Attend the National Convention of Town and Village Mayors

PM
12:37 The office of PM
02:53 Parliament
03:00 Debate among party leaders
03:54 The office of PM
04:07 The National Policy Unit meeting
05:10 The meeting adjourned
05:35 Meeting with Prime Minister Gruevski of Macedonia
06:08 The Government Revitalization Unit meeting
06:51 The meeting adjourned
07:00 Mr. Tezuka, Special Advisor to PM
07:30 The residence of PM

November 29, 2011

AM
07:49 Parliament
07:51 Ministerial committee on global warming
08:16 Ministerial meeting
08:42 The office of PM
08:44 Mr. Tezuka, Special Advisor to PM
08:57 Mr. Tezuka leaves
10:16 Japan Firefighters Hall (Nissho Hall), Toranomon, Tokyo
10:30 Attend a memorial service for the victims to their duty in the 3/11 earthquake and tsunami at Nissho Hall.
11:25 His office at the First Member’s Office Building of the Lower House
11:42 The office of PM

PM
12:54 Parliament
01:02 The Lower House Plenary Session
01:11 The office of PM
01:18 Three DPJ/Government Executive Meeting
02:08 Parliament
02:10 Mr. Azumi, Minister of Finance , the Upper House Second Committee Room
02:13 The Upper House Committee of Financial Affairs the Upper House Third Committee Room
05:16 The office of PM
05:32 Attend “Forum for Consultations between the National and Regional Governments”
05:45 Mr. Tezuka, Special Advisor to PM
06:14 Mr. Furukawa, Minister of State for National Policy
06:36 Headquarters for the Reconstruction from the East Japan Earthquake
06:54 “Government and Ruling Parties Council on the Formulation of the Budget”
07:22 The residence of PM