- Prime Minister Fumio Kishida is calling for a tax hike of 1 trillion yen ($7.4 billion) by fiscal 2027 to pay for Japan’s massive defense buildup.
- Now comes the hard part for the government: choosing which tax to increase, where to set the new rate and what the time frame will look like.
- But the largest faction in the ruling Liberal Democratic Party once led by the late Shinzo Abe is not about to make that process easy. Seiwa Kai members expressed staunch opposition to the hike at a meeting on Dec. 8.
A hefty tax increase is higher fiscal policy (all else remaining equal) – its still hard to see how monetary policy gets tightened in Japan for now.