The ruling Liberal Democratic Party and its coalition partner, the Komeito party, have agreed to make a fresh start on talks to study ways to reduce the burden on consumers when the government further raises the consumption tax rate.
The move comes as the two parties remain apart over the Finance Ministry’s proposed tax refund scheme aimed at mitigating the impact on spending for daily goods when the 8 percent tax rate is raised to 10 percent in April 2017.
At their meeting on Friday, the Komeito party expressed opposition to the tax refund plan supported by the LDP, calling for the consideration of reduced tax rates for a range of food and other daily necessities as widely adopted by European countries.
“We see difficulties in adopting” the tax refund plan, said Komeito tax panel chief Tetsuo Saito.
“We’d like to resume discussions as early as mid-October after marshaling issues” for discussion, LDP tax panel chief Takeshi Noda told a press conference.
Despite the differences over the issue, the parties confirmed they will continue studying the feasibility of both plans and have an agreed measure included in tax reform proposals for fiscal 2016 to be compiled in mid-December.
The proposed tax refund plan would see a 10 percent tax rate levied on all items, with the government providing 2 percent tax refunds for all food and beverage purchases excluding alcoholic drinks.
Under the program, customers would be asked to carry personal identification cards bearing “My Number” codes, which will be distributed next month, allowing the government to keep track of purchases eligible for tax refunds.
The proposed plan has been criticized as consumers would have to carry the cards at all times and file tax refund requests themselves, while applying multiple tax rates would also increase the clerical burden on businesses.
“We will continue our efforts to reach a realistic conclusion that satisfies both consumers and businesses,” Noda said.