The Japanese economy and people are suffering from the Covid-19 disaster. Prime Minister Fumio Kishida won a thinly-veiled victory in the elections by denying that the consumption tax rate will be raised in the near future or that financial income taxation will be strengthened, and by reassuring the public that large-scale economic measures will be taken. Against the backdrop of this victory, we now hear that a “no-brainer tax hike scenario” is underway in the government.
We uncover the inner workings of this astonishing plan.
Since his inauguration as prime minister on October 4, Mr. Kishida has been energetically visiting the areas affected by the Great East Japan Earthquake, hospitals, pubs, and other places in an effort to carry out the “wheelchair dialogue” that he announced in his policy speech. Although his approval rating for the cabinet is low, many people are impressed by his attitude of visiting various places instead of staying in the prime minister’s office.
However, the bureaucrats in the Kasumigaseki bureaucracy have mixed feelings about the new commander-in-chief. The reason for this is the “ambiguity” and “iridescence” of the new prime minister.
The prime minister did not include in his policy speech or in the LDP’s government pledges the “2020 Income Doubling Plan” or the creation of a “Health Risk Management Agency,” which he announced in his campaign for the LDP presidency at the end of September. “He has also announced that he will not include in his policy agenda “breaking the ‘100 million yen barrier’ by reviewing the taxation of financial income.
This is the way an organization should work: subordinates are presented with multiple options, and the top management takes responsibility for deciding on a single path forward. The Kishida administration, however, has not been able to set a clear direction, and in many cases, decisions are only made while it remains “ambiguous” as to which option to settle on. This has not only upset the bureaucracy, but also the business community and the market.
This “iridescence,” which can be interpreted in any way depending on one’s point of view, is now the “essence” of Kishida’s colors.
This is the essence of Kishida’s “iridescence,” which can be interpreted in any way depending on one’s point of view. The “tax hike scenario” that is rumored to be in the works is a perfect symbol of this. Let’s take a look at the inside story.
A Cleverly Hidden Message
“I don’t think you’ll notice it at first glance, but if you look at it from a different angle, you’ll see it.
But if you look at it from a different angle, you can see it. The premise of this scenario is based on the energy policy that was highlighted by the previous administration of Yoshihide Kan.
In October 2020, the Kan administration declared that it would aim to create a “decarbonized society” in which greenhouse gas emissions would be reduced to virtually zero by 2050. The total amount of greenhouse gas emissions, which are the main cause of global warming, will be reduced to practically zero by subtracting the amount absorbed by afforestation and forests from the total amount of greenhouse gas emissions. This is the so-called “carbon neutrality by 2050.
In April of this year, former Prime Minister Kan also set a new target of reducing greenhouse gas emissions by 46% from the FY2013 level by FY2030, and then Environment Minister Shinjiro Koizumi boasted, “We have been able to create a great momentum toward carbon neutrality.
This was backed up by the Basic Energy Plan, which sets the direction for medium- and long-term energy policy. Let’s take a look at the contents of the plan, which was revised for the first time in three years.
With regard to renewable energy sources such as solar power and wind power, the plan states that “maximum efforts will be made to introduce these sources under the principle of giving them top priority as main power sources,” using the term “top priority” for the first time. The plan’s ambitious forecast calls for doubling the share of renewable energy in the power supply mix to 36-38% in FY2030, double the current level.
This is an important point to consider. Looking at the percentage of non-renewable energy sources, nuclear power will account for 20-22% (currently 6%), unchanged from the previous target. For 2050, the plan calls for “utilizing decarbonized power sources that are at the practical stage,” including renewable energy and nuclear power, and in particular for “sustainably utilizing nuclear power on the necessary scale.
I’m sure you get the idea by now. Thermal power generation, which uses fossil fuels such as oil and coal, emits carbon dioxide in the process of generating electricity using heat energy, but nuclear power generation does not, because it uses the heat generated by nuclear fission. As the Basic Energy Plan calls for “decarbonized power sources,” the realization of a decarbonized society will be a tailwind for the “promotion of nuclear power.
Regarding nuclear power plants, Prime Minister Kishida has given high priority to safety in his plan to restart nuclear power plants, but he has avoided saying anything about building new plants. However, the plan clearly states that the government will “reduce its dependence on nuclear power as much as possible,” but leaves open the possibility of “sustainably utilizing the necessary scale.
A current bureaucrat at the Ministry of Economy, Trade and Industry (METI) stresses, “We need to work towards a global decarbonization.
“We can’t ignore the global movement toward decarbonization. If we are serious about decarbonization, we must take all necessary measures.
Another plan being considered by the government is a “carbon tax,” a tax increase based on the amount of carbon dioxide emitted.
If a carbon tax is introduced, companies will refrain from excessive use of energy to avoid the cost burden. This is believed to lead to the reduction of carbon dioxide emissions, and has been introduced mainly in Europe, including Switzerland and Sweden. One government official said, “There will be a lot of opposition, but the nuclear power plant and the carbon tax will be a set. We will have a direction by the end of this year.
If the “forbidden move” of increasing taxes in addition to the use of nuclear power is implemented, it may indeed help reduce greenhouse gas emissions. However, the business community is opposed to the idea because of the new burden it would place on corporations. The Keidanren (Japan Business Federation) said in September this year, “The rationale for introducing new measures is not clear at present.
In addition, the burden on the public should not be forgotten. If a carbon tax is introduced, it will lead to higher prices for gasoline and other products.
Even so, the people suffering from the Covid-19 scourge have to deal with the rising price of gasoline caused by the soaring price of crude oil. According to a survey released by the Ministry of Economy, Trade and Industry (METI) on October 20, the national average retail price of regular gasoline has risen for seven weeks in a row, to 164.60 yen per liter, the highest price in seven years. With the addition of the carbon tax, the impact of this “triple punch” on household budgets will be immeasurable.
The aforementioned bureaucrat from the Ministry of Economy, Trade and Industry pointed out, “Even if Prime Minister Kishida says, ‘Okay, let’s go ahead with this,’ the thinking of the heavyweights in the Liberal Democratic Party will also be a major factor,” suggesting that the direction of the Kishida administration may be blurred.
Prime Minister Kishida has been conspicuously “iridescent,” which could be taken either way. Will he take advantage of his election victory to promote nuclear power and introduce a carbon tax under the banner of environmental protection? It will be interesting to see.
Reporting and writing： Kenichi Ogura Photo: AFLO： AFLO