Advisory Council Urges Steady Implementation of Food Consumption Tax Cut and Worker Burden Relief Payments
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The government convened its Council on Economic and Fiscal Policy on the 30th to discuss issues the cabinet should address by year-end. Private-sector members pointed out that sluggish consumption stems from "the squeeze on household real income from rising prices since fiscal 2022," and called for steadily advancing a consumption tax cut on food and the introduction of support payments to ease the burden on workers in order to reduce the strain on low- and middle-income households. They further urged that the tax rate be reliably restored to its original level in two years to ensure fiscal credibility. While real wages have recently been positive, average wage growth since 2021 has failed to keep pace with the inflation rate of 2.6 percent annually, with food prices in particular rising 5.9 percent. Private-sector members stressed that "measures to raise the real income of low- and middle-income earners are important," while arguing that conventional temporary inflation measures such as electricity and gas subsidies and gasoline subsidies "should have their necessity scrutinized, and the focus should shift toward sustained income growth and a review of the burden structure."