The restaurant industry may be hit hard… Prime Minister Takaichi plans to win a landslide victory in next spring’s nationwide local elections with a 1% consumption tax.

Political gamesmanship hidden in plain sight

The food service industry will be hit hard. I would like to ask them to reconsider.

This is what a senior employee of a major restaurant chain told this website. The fact that Prime Minister Sanae Takaichi (65) has announced a consumption tax cut for next spring is causing a stir.

Although she has always been negative about cutting the consumption tax, she suddenly announced during the lower house election in February of this year that she would aim to eliminate the consumption tax by the end of the fiscal year 2014. With the effects of the armed conflict between the U.S. and Iran resulting in higher prices, a tax cut has become a realistic possibility.

Most recently, a proposal to set the tax rate at 1% rather than zero has surfaced, based on the cost of refurbishing cash registers. The tax is expected to be applied mainly to foodstuffs for a limited period of two years. The Japan Innovation Party, which is a member of the coalition, has also expressed its support for the tax rate.

“Zero percent is not absolute,” said one member of the Japan Restoration Association, which forms a coalition.

The Japan Restoration Association, which is a member of the coalition, has also voiced its opinion that “0% is not absolute,” and it is possible that the “1% consumption tax era” will begin in April next year.

Political gamesmanship is also apparent.

Next spring, the nationwide local elections will be held as a “prelude” to the House of Councillors election in the summer of 2008. If the government is too concerned about the zero consumption tax, it will have a negative impact on the election if the election is delayed. In response to an interview, political commentator Harumi Arima said

Prime Minister Takaichi is keen to achieve the 0% consumption tax that he pledged in the general election, no matter what it takes. Many in the LDP were opposed to a consumption tax cut, but after his overwhelming victory in the general election, they decided to “give him some flowers. It seems that if they are going to do it anyway, they want to make it the centerpiece of the nationwide local elections next April.

The Nagata-cho people are “electorally minded” and “have no interest in the election. In Nagata-cho, “Strong in elections is righteous. Does this mean that a crushing victory in the local elections is more important than the people’s pocketbooks? ……

If the zero consumption tax on foodstuffs were to become a reality, the restaurant industry would suffer a major blow. Takafumi Horie, 53, who produces the upscale Wagyu beef restaurant “WAGYUMAFIA” and other restaurants, said in a You Tube video on May 31

Fix the consumption tax on food to 10% already!　It’s already a hassle. It’s a hassle to deal with the system and to deal with it. Also, you guys in restaurants should speak up. There will be fewer eat-ins and fewer people going to restaurants. Of course they will decrease. Because it’s cheaper to cook at home!

He became more emphatic.

And the second part of the Corona subsidy.

The unstoppable holier-than-thou…

[Joon] What are you going to do if you stimulate demand when there’s inflation?　If you make food cheaper, demand for food will increase, won’t it?　If demand increases, there will be inflation. Inflation will accelerate. Of course it will!

He was in an angry mode until the very end.

The restaurant chain executive mentioned at the beginning of this article also commented.

It’s a matter of life and death for us. We don’t know if purchase prices will go down, but we may have to cut prices to compensate for that. The number of customers will decrease, and I think some restaurants will go out of business.

He points out. If the restaurant industry is adversely affected, inbound demand for Japanese food will also be affected.

Perhaps in response to these concerns, it was reported on June 4 that the government is considering providing subsidies to the food service industry and small- and medium-sized agricultural and fisheries businesses. A political reporter for a national newspaper commented on this.

The COVID-19 crisis reminds me of the subsidies for restaurants. While some people were really saved, there were a number of vendors abusing the subsidies. One of my acquaintances was so delighted that he bought a luxury foreign car, saying, ‘I can make more money than opening a restaurant. If the consumption tax cut and subsidies reduce the financial resources, it is conceivable that taxes will be raised in other areas. To what extent does the government anticipate this?”

he said.

The Takekita Noboru Cabinet, which introduced a 3% consumption tax in 1989, saw its approval rating plummet.

It is clear that if the consumption tax is raised, the approval rating will drop. The 1% consumption tax was a limited measure for two years. It is possible that headwinds will blow when the tax rate is raised again. Will the prime minister be able to withstand it?

A source in Nagatacho pointed out, “The prime minister will have to win the Upper House election before then. He may be trying to win the Upper House election by then and take full control of the country’s politics, both in name and in reality. ……

Amid fears of an economic recession, the Takaichi administration is being forced to make a difficult decision.