- The Ruling Bloc's Tax Reform Guidelines for FY 2025
- Nissan—Honda Merger
- Meeting with Prime Minister Ishiba
- This Year's Chinese Character
The Ruling Bloc's Tax Reform Guidelines for FY 2025
(In response to a query requesting the Chairman's take on the ruling bloc's tax reform guidelines for FY 2025) I appreciate the efforts made by all involved in putting these guidelines together.
To secure more financial resources for national defense, the corporate tax rate is to be increased 4% in April 2026. Given that strengthening the nation's defense capabilities is something that benefits society as a whole, including the corporate sector, companies should be willing to shoulder their share of this burden. Moving forward, it is my understanding that lawmakers will continue to debate the income tax hike that was put on hold.
Regarding the so-called "1.03 million yen income barrier," I applaud the Democratic Party for the People for bringing up the need to increase the disposable income of the working generation and address the reluctance of part-time workers to cross the current taxable income threshold.
However, in addition to the 1.03 million yen barrier, these workers will next face the 1.06 million yen and 1.3 million yen thresholds or "barriers" related to mandatory enrollment in social insurance. Another issue, however, is that while our nation already faces extremely tight financial conditions, interest payments on government bonds are expected to surge in a world with interest rates and projected increases in the intensity and frequency of natural disasters will likely compel it to increase related fiscal outlays. However, it is anticipated that the pending increase in the 1.03 million yen taxable income threshold will lead to a drastic cut in tax revenue, on the order of 7–8 trillion yen. Should that happen, Japan will not be able to maintain its current level of fiscal discipline.
Accordingly, rather than dealing with them separately, it is imperative that our lawmakers discuss these issues of fiscal discipline, taxation, and social insurance together, in the interest of working out an integrated solution. The government needs to draw up a comprehensive plan for integrated reforms with a schedule for implementation backed by a sense of priorities. We want the ruling and opposition parties to sit down and discuss actions to this end.
Nissan—Honda Merger
(In response to a question regarding news reports that Nissan Motor Co., Ltd. and Honda Motor Co., Ltd. have launched discussions aimed at exploring a business merger between the two automakers) I will refrain from commenting on any of the specifics regarding this matter.
The automotive sector is a core industry driving the Japanese economy. At least once in a century, this industry can be expected to face a major phase of upheaval, followed by intensifying competition on the global stage. Amid that transition, individual companies will likely achieve technological innovations and boost their international competitiveness if they reorganize their business operations through mergers and tie-ups that capitalize on their respective strengths. Generally speaking, we should openly welcome business mergers of this nature. I look forward to seeing the two companies make smooth progress in their dialogue.
Meeting with Prime Minister Ishiba
(In response to a question about the Chairman's recent meeting with Prime Minister Ishiba [on December 23]) First of all, I am grateful that the Prime Minister took time out from his heavy schedule during the extraordinary Diet session to meet with me. That meeting was productive.
During our talks, I outlined the key points of Future Design 2040. The Prime Minister showed understanding for our views on related issues and also expressed interest. In particular, he demonstrated a broad and deep understanding of regional revitalization and discussed initiatives aimed at resolving the challenges currently facing regional economic societies.
(In response to a question regarding the "new doshu bloc concept" advocated in Future Design 2040) If individual districts pursue efforts in regional revitalization based on similar development initiatives, the benefits will be limited because that approach will end up creating numerous homogenous regions. Future Design 2040 calls for "doshu" blocs with local populations of around 5 million to cooperate in developing "new doshu blocs" through which regional communities will achieve autonomous and sustainable development by fully maximizing their appeal and engaging in friendly competition. I also conveyed these views to Prime Minister Ishiba during our meeting today. Exploring the creation of mechanisms to translate this concept into reality will be a topic for future discussion.
This Year's Chinese Character
As the Chinese character symbolizing 2024, I nominate "ron," the character for discourse. This year was one of major turbulence for public "discourse." Generative AI and social media flooded the world with a deluge of factually unverified information, arguably ushering society into a "post-truth" age marked by the power to shape public opinion more through individual emotions and beliefs than through objective facts. In an age like this, we need more discussion and debate.
The Future Design 2040 vision recently announced by Keidanren places emphasis on sound reasoning. I nominate "ron" (discourse) as the Chinese character for 2024 in the hope that the coming year will be one of productive "discourse" throughout Japan.
(In response to a question regarding current political discourse under the minority government formed by the ruling coalition) This is an opportunity for unrestrained debate precisely because we now have a minority government in power. My hope is that the ruling and opposition parties will now engage in a level of discourse that allows their competing arguments to clash, albeit with the interests of Japanese society and its citizens in mind.
As they are prone to do, the ruling and opposition parties will likely be engaged in a debate over benefits, but this time, they must think of benefits and burdens (financial resources) as a single package. Assuming the ruling and opposition parties are responsible political entities, we trust they will pursue their discussions and debates by shouldering the responsibilities that come with the implementation of government policy.