Press Conference by Prime Minister TAKAICHI Sanae regarding Comprehensive Economic Measures and Other Matters

Good afternoon, everyone. Since the inauguration of the Takaichi Cabinet, we have placed the highest priority on addressing the rising cost of living faced by the people. To swiftly deliver the benefits of our measures to the people, the Government and the ruling parties have just decided on a package of comprehensive economic measures to realize a robust economy. This package was formulated through intensive consultations with both ruling and opposition parties and is aimed at turning unease into hope by drawing on the latent power of Japan and the Japanese people.

In this economic package, while placing top priority on swiftly delivering measures to ease the burden of rising prices on the people, we will secure budgetary allocations that lay the groundwork in fields that will be critically important for strategic investments that enhance resilience against potential crises and also for investments that promote growth. We will implement strategic fiscal spending to protect people’s livelihoods and build a robust economy.

The package comprises three main pillars, which you see here [on the monitor]. As a result of fully mobilizing every policy tool, including the budget, government investment and loan operations, the tax system, and regulatory and institutional reforms, the overall scale of this economic package includes about 17.7 trillion yen from the General Account. Adding tax cuts and Special Accounts, the national expenditure, or what we might call fresh fiscal injections, is expected to come to roughly 21.3 trillion yen in all. For the breakdown, please have a look at the monitor.

After adding fiscal investment and loan programs to this approximately 21.3 trillion yen in new fiscal injections, the Government's fiscal measures will amount to some 25.5 trillion yen. As for how that will be funded, we are considering issuing government bonds to cover whatever shortfall remains after mobilizing higher-than-expected tax revenues as well as non-tax revenues and other revenue sources.

That said, the amount of sovereign bond issuance after the initial and supplementary budgets are combined is expected to come to less than the 42.1 trillion yen issued in fiscal 2024 after the supplementary budget was passed. This structure demonstrates a careful regard for the sustainability of public finances.

Responsible and proactive public finances entail a purpose-driven and forward-looking approach to fiscal policy. This line of action is not in any way about pursuing size simply for the sake of expansion. We will thoroughly implement the principle of spending wisely while employing strategic fiscal policies that have the aim of safeguarding people's daily lives and forging a strong economy.

What Japan needs to implement now is not an undermining of our strength as a nation through excessive austerity policies, but rather a bolstering of our national strength through proactive fiscal policies. As the International Monetary Fund (IMF) has pointed out, we must give due consideration to the fact that hasty fiscal reconstruction which diminishes growth in fact impairs fiscal sustainability.

Without growth, fiscal sustainability cannot be maintained. For the sake of the next generation as well, it is incumbent upon us to realize sustainability in public finances through increased tax revenue, which will result from an economic virtuous cycle in which a growing economy leads to improved corporate earnings and also higher personal income associated with wage increases. As we build a robust economy and raise our growth rate, we will reduce the government debt-to-GDP ratio, realize fiscal sustainability, and ensure the confidence of the markets.

The first pillar is enhancing security in people's daily lives and responding to rising prices. In order to protect people's daily lives and also their workplaces from price increases, we will combine various measures to provide well-tailored responses, giving highest priority to getting the effects of our initiatives delivered to people swiftly. We will also lighten the burden imposed by energy costs.

As for the so-called provisional tax rates, in keeping with an agreement brokered across various political parties, we will do away with the provisional tax on gasoline on December 31 and the provisional tax on the delivery of diesel oil on April 1. As we abolish these provisional tax rates, we will utilize subsidies to lower prices until the rates are eliminated, while also securing the stable financial resources needed by the national and local governments. The amount of tax reductions achieved through the abolition of the provisional tax rate on gasoline is expected to be 1.0 trillion yen, resulting in the average burden per household being lowered by about 12,000 yen annually.

In addition, to support those facing a difficult situation in the wake of price increases, we will provide assistance for electricity and natural gas bills from January through March 2026. This will result in relief totaling roughly 7,000 yen per household over those three months. As for disincentives for second earners to earn more than 1.03 million yen in annual income, known as the “1.03-million-yen barrier,” fiscal year 2025 revisions to the Income Tax Act will result in income tax cuts reaching some 1.2 trillion yen, or roughly 20,000 to 40,000 yen per relevant taxpayer. This will be reflected in this year's year-end tax adjustment. Also, as for further raising the basic deduction in a manner linked to inflation, we will consider and reach a conclusion on that measure as part of our fiscal year 2026 revisions to the Income Tax Act.

We will expand our provision of grants to local regions for prioritized assistance, allocating 2 trillion yen to this program. These grants will serve as a response to price increases that carefully targets the particular needs of each local area. In addition to the general framework, which provides support equivalent to an average of roughly 10,000 yen per household, in consideration of the sharp rise in food prices, we will allocate the equivalent of 3,000 yen per person, or 12,000 yen for a family of four, as a special additional amount in a separate category.

Beyond that, we will build up our menu of recommended measures, which includes assistance for kerosene and water bills, initiatives to foster an environment in which small- and medium-sized enterprises (SMEs) and small-scale employers can increase wages, various kinds of support for low-income individuals, and assistance for business operators. We will also strengthen our initiatives to promote rapid and effective implementation of projects by local governments.

Based on the proposal by Komeito that we should provide swift support to people across a wide range of income levels and the proposal by the Constitutional Democratic Party of Japan for an emergency relief payment to address rising food prices, in addition to the support provided through our grants to local regions for prioritized assistance, we have included in our policy package child-rearing support allowances to help counter price increases. These will be provided in the amount of 20,000 yen per child, totaling some 400 billion yen.

In order to protect the lives of our citizens and safeguard their daily living, we will implement urgent measures that provide subsidies through a support package for medical care, nursing care, and related services. This will be carried out ahead of schedule, without waiting for the timing of regular revisions to reimbursements for medical and nursing care services, and will center on medical institutions and nursing care facilities operating in the red.

As for improvements in the treatment employees in these fields receive, we will institute measures that will increase wages by 3 percent over half a year for all employees working at medical institutions that raise wages. We will also increase wages by 10,000 yen per month over half a year for every individual employed as a caregiver. In addition, we will provide support for managerial improvements, including for medical material expenses, hospital reconstruction, and adjustments to the number of hospital beds.

We will also thoroughly implement the ability to pass price increases through to product prices in procurement conducted by government offices and public institutions, and provide assistance at a scale of roughly 1 trillion yen across the government as a whole for measures targeting SMEs and small-scale employers. We will harness financial resources earmarked for special use and other funding sources to fundamentally strengthen our support for growth investments made by SMEs that have publicly committed to growing their annual sales to 10 billion yen or more, known as "Ten Billion Yen Declaration Companies," that are implementing wage increases, as well as growth investments by other entities.

Moreover, we will take steps to develop the foundation of local communities in which people can feel secure, including by steadily and rapidly implementing a package of support measures addressing bear-related injuries and damage as well as by reinforcing measures to enhance public safety and counter terrorism, bolstering our responses to issues related to foreign nationals in Japan, revitalizing public education, and making education effectively free. Furthermore, drawing upon an economic policy proposal by the Democratic Party For the People, we have also included provisions for returning funds to the former Compulsory Automobile Liability Insurance (Mutual Insurance) Special Accounts, a long-standing issue.

The second pillar is to build a stronger economy through investments that enhance resilience against potential crises and drive growth. For multi-year government initiatives, we will promote efforts to ensure predictability for those involved. In doing so, we will begin examining a new framework for investment in sectors of critical importance to economic security to mitigate risks, following our previous multi-year funding frameworks for GX and for AI and semiconductors. For the seventeen designated strategic areas, we will allocate initial budgetary resources.

To begin with, we will strengthen economic security through efforts such as supporting public-private investment as well as reinforcing supply chains for essential materials in strategic fields such as semiconductors, shipbuilding, quantum technologies, space, information and communications, critical minerals, and cybersecurity.

To establish food security, we will support structural reform in the agriculture and fisheries industries; cutting-edge technologies such as fully enclosed plant factories; and efforts to expand exports of agricultural, forestry, and fishery products and foodstuffs to enhance overall production capacity.

With respect to strengthening energy and resource security, we will provide well-planned support through the concrete implementation of the growth-oriented carbon-pricing concept set out in the GX Promotion Strategy. We will also advance measures based on the Mid-term Plan for the Implementation of National Resilience to promote disaster prevention, disaster mitigation, and national resilience.

Furthermore, in expanding investment for the future, we will support advanced science and technology development, strengthen assistance for start-ups, promote the content industry and related sectors, and develop a robust health and medical security system that includes proactive preventive medicine, along with other research and development initiatives.

The third pillar is the strengthening of our defense and diplomatic capabilities to safeguard the security of the Japanese people and support the nation’s prosperity. In light of the increasingly severe international environment, we will advance a fundamental reinforcement of our defense capabilities. We will enhance our personnel base and improve conditions so that those who protect our nation can perform their duties with pride. As a result, with respect to achieving defense expenditures at the level of 2 percent of GDP, as set forth in the National Security Strategy, we will bring forward approximately 11 trillion yen in FY2025, including the initial budget. This will amount to an additional allocation of 1.1 trillion yen.

Regarding our response to U.S. tariff measures, we will implement necessary steps under the Japan–U.S. initiative on strategic investment, while also providing robust support to mitigate the impact on the domestic economy and industry, including measures to support financing for small and medium-sized enterprises and to improve their business environment.

Finally, as preparation for potential risks—such as natural disasters, further price increases, or the expansion of bear-related damage—we will secure additional contingency funds so that we can respond swiftly to unforeseen fiscal needs and ensure the safety and peace of mind of our citizens in their daily lives.

Our top priority with the economic measures approved today is to deliver their benefits to the public without delay. To that end, we will compile the supplementary budget that underpins these measures and submit it to the upcoming extraordinary Diet session for early passage. Through these efforts, we will turn unease and apprehension—both regarding people’s current lives and their future—into hope, build a stronger economy, and make the Japanese archipelago more resilient and more prosperous. That concludes my opening remarks. Thank you.
 

Reporter: The government has just approved the Comprehensive Economic Measures through a Cabinet decision. I would like to ask once again about the aims of the measures addressing rising prices, as well as investments to enhance resilience against potential crises, to which the Prime Minister has expressed strong commitment. In addition, the total budget size—combining the General Account, the Special Accounts, and the tax-cut component—amounts to approximately 21.3 trillion yen, with General-Account expenditures exceeding last year’s level. The Takaichi administration has put forward the concept of “responsible and proactive public finances.” How do you intend to secure the confidence of the markets in this approach?

Furthermore, today marks one month since your administration was inaugurated. How do you, Prime Minister, assess your administration’s performance to date, and could you also share your aspirations going forward?

PM Takaichi: Thank you for the question. This package of economic measures has been formulated under the concept of “responsible and proactive public finances.” It is designed to promptly address issues impacting people’s daily lives—particularly rising prices—as part of our efforts to ensure security in that regard. At the same time, by making strategic fiscal investments to enhance resilience against potential crises and to achieve growth, we aim to build a stronger economy. These measures represent a carefully compiled set of policies deemed necessary to achieve those objectives.

As for the funding sources, as I stated earlier, while we will make use of factors such as higher-than-expected tax revenues, any remaining shortfall will be covered through the issuance of government bonds. However, the amount of government bonds to be issued, after the supplementary budget is added to the initial budget, is expected to fall below last fiscal year’s post-supplementary total of 42.1 trillion yen. This package fully takes into account the need to ensure fiscal sustainability. In any case, by building a robust economy and raising the growth rate, we will reduce the government debt-to-GDP ratio, secure fiscal sustainability, and ensure the confidence of the markets.

One month has passed since the inauguration of my Cabinet. During this period, I have worked tirelessly for the country and its people, including responding to the rising cost of living that the public is facing, advancing efforts to realize a robust economy centered on strategic investments that enhance resilience against potential crises, and pursuing diplomacy through such occasions as the ASEAN-related summit meetings, the Japan–U.S. summit meeting, and the APEC Leaders’ Meeting. With today’s compilation of the economic package, the Takaichi administration has been able to present a certain direction toward achieving the goals we have identified from the outset as our highest priorities—addressing rising prices, building a robust economy, and ensuring strong diplomacy and security.

Going forward, we will give concrete form to these measures in the form of a supplementary budget and submit it to the Diet. By engaging in sincere and careful discussions with both the ruling and opposition parties, we will do everything possible to secure passage of the supplementary budget and deliver a sense of security in people’s daily lives. This will be our foremost priority.

Reporter: I would like to ask about your overseas visit as well. You will soon depart for the G20 Summit in South Africa. What messages do you intend to convey as Japan’s position? Following your recent attendance at the ASEAN-related summit meetings and the APEC Leaders’ Meeting, what outcomes do you hope to achieve on this visit? In addition, Chinese Premier Li Qiang is also scheduled to attend the G20 Summit. What kind of discussions do you hope to have regarding Japan–China relations, and what is the current status of arrangements for a meeting with Premier Li? Regarding Japan–China relations, the Chinese side has expressed opposition to your remarks in the Diet that a contingency involving Taiwan could constitute a survival-threatening situation. How do you view this reaction, and do you have any intention of retracting your remarks? I would like to ask for your views once again.

PM Takaichi: Yes. I will now visit South Africa to attend the G20 Johannesburg Summit. The G20 is a framework that brings together major advanced and emerging economies, which together account for more than 80 percent of global GDP. At this meeting, the leaders are scheduled to discuss a range of issues facing the international community, including the international economy, disaster risk reduction, debt sustainability, energy transition, and critical minerals. I will firmly present Japan’s positions and initiatives. I intend to call on all G20 members to work together to address these challenges in a manner that reflects our shared responsibility, with a view to upholding and strengthening a free and open international order based on the rule of law and rebuilding responsible global governance. In addition, I hope to build further relationships of trust and cooperation with the leaders of participating countries on this occasion. As for bilateral meetings, arrangements are currently being made based on the offers we have received from participating countries.

With regard to China, at the end of last month, President Xi and I confirmed the broad direction of comprehensively promoting a “Mutually Beneficial Relationship Based on Common Strategic Interests” and building “constructive and stable Japan-China relations.” Our position in this regard remains entirely unchanged.

As for the matter raised in your question, whether a given situation constitutes a survival-threatening situation will be determined by the Government based on a comprehensive assessment of all available information, taking into account the specific circumstances of the situation that actually arises. This explanation is exactly what the Government has repeatedly stated since the time of Prime Minister Abe, when the Peace and Security Legislation was enacted. I myself have repeatedly given this same answer. The Government’s position remains consistent. That is all.