New Year’s Press Conference by Prime Minister TAKAICHI Sanae

[Opening Statement by Prime Minister Takaichi]

Happy new year, everyone.

Seventy-seven days have now passed since I assumed the office of prime minister. During this time, my administration has drawn up economic measures to counter the rise in prices, formulated and held Diet deliberations on a supplementary budget to back those measures, compiled a policy outline on tax reforms for fiscal year 2026, including income tax cuts achieved by increasing the threshold at which secondary earners in a household become disincentivized to earn more, known as the “annual income barrier,” and gotten Cabinet approval on the budget proposal for fiscal year 2026. In terms of diplomacy, I have participated in the Association of Southeast Asian Nations (ASEAN)-related Summit Meetings, the Asia Zero Emission Community (AZEC) Leaders Meeting, the Japan-U.S. Summit Meeting, the Asia-Pacific Economic Cooperation (APEC) Economic Leaders’ Meeting, the G20 Summit, and the Summit of the "Central Asia plus Japan" Dialogue, among other diplomatic occasions. It has been 77 days of pushing myself to the limit to tackle the challenges facing us.

Today, as we embark on a new year, I have visited Ise Jingu shrine, where the crisp, invigorating air gave me a renewed sense of resolve. In 2025, Japan was again struck by a series of natural disasters, including the earthquake centered off the eastern coast of Aomori Prefecture. I wish to offer my heartfelt sympathies once more to all those affected by these disasters. I also offer my heartfelt prayers that the new year is a safe and happy one for all the Japanese people.

I have reasserted my determination to protect this Japan, which boasts a long history and unique culture, with families and communities providing support for one another while conserving our beautiful natural environment and valuing harmony. I intend to make Japan stronger and more prosperous in every corner of the archipelago and then hand it down to the next generation.

In the Oriental zodiac, this is the year of the hinoe-uma, or the “fire horse.” It is said that “hinoe” (fire) means that positive energy carried over from the previous year will develop further and with greater clarity.

In 2025 it was decided that the provisional tax rates on gasoline and the delivery of diesel oil would be abolished. We succeeded in eliminating provisional tax rates that had been on the books for more than half a century. We can achieve things if only we try. We can achieve them if we put in the effort. Last year, positive energy newly emerged toward forward-looking reforms. I plan to make that energy into something even more robust this year, and I intend to boldly take on reforms, no matter how challenging they might be.  

On any number of occasions last year, I personally encountered the latent power and the positive energy manifested by Japanese people.

In Noto, I had the opportunity to speak with people affiliated with Otani Elementary and Junior High School in the city of Suzu. They have been planning and producing keychains, stickers, and other items and contributing all the proceeds to the disaster-affected areas. One of the messages on their stickers reads, “Great job working so hard -- you and I both!” These are people who had spent roughly a year in evacuation centers and are currently living in emergency temporary housing, and yet they are now trying to lift the spirits of others. I had visited there intending to encourage people, but instead I was the one encouraged by their strength in aspiring to raise other people’s spirits. 

I also had the chance to speak with artists and creators producing Japan’s superb content. Feeling the positive energy from these top-tier individuals so acutely deepened my conviction that Japanese are absolutely capable of competing in international markets.

The character used to write “horse” in the Oriental zodiac also has the meaning of the dividing line that separates the morning from the afternoon. So this year of the fire horse can also be regarded as the timing to prepare for the transition from an energy-filled state to the era coming next -- in other words, a watershed moment. This year may also become a major watershed moment for Japan.

As the international environment surrounding Japan changes dramatically, over the next year, we must take on the various challenges of political administration while never losing sight of the broader perspective and keeping firmly in mind how Japan will forge a path forward in the next era. I feel this very strongly.

In making the Japanese archipelago stronger and more prosperous, what needs to be done is entirely clear. Japan must be a nation where the working generation can feel tangibly that tomorrow will be better than today. As 2025 drew to a close, through cooperation with the Democratic Party For the People, we made the decision to reduce the income tax burden for a broad swath of the working population, including the middle class, by raising the income level at which secondary earners in households start facing financial disincentives to work, often referred to as the “annual income barrier.” Furthermore, grounded in our coalition agreement with the Japan Innovation Party, our policies to make education effectively free will also be implemented, beginning in April.

The budget for fiscal year 2026 includes a significant amount of these kinds of bold investments that are focused squarely on the future. Such investments will lead to Japan’s robust economic growth and, thanks to increased tax revenues, give rise to a virtuous cycle of investment and growth, making further investments possible.

At the same time, we kept in check our degree of reliance on government bond issuance within the fiscal 2026 budget, keeping it at a level lower than that of the initial budget for fiscal 2025. We will steadily lower our government debt-to-GDP (gross domestic product) ratio and boldly invest in fields needing investment while ensuring fiscal sustainability. This is precisely what we mean by responsible and proactive public finances.

Bright prospects are emerging for this year’s economic conditions. The government’s economic outlook forecasts price increases of 1.9 percent for 2026, a figure close to our price stability target of +2.0 percent. This stands in contrast to the actual inflation rate for 2024 of +3.0 percent. Of particular note, making education effectively free will help by lowering our overall inflation rate by 0.3 percent. Beyond that, abolishing the provisional tax rates on gasoline and on the delivery of diesel oil will also have an effect, such that energy prices are expected to decrease by 0.1 percent in 2026, in contrast to the 0.6 percent price rise we saw in 2024.

A nominal GDP growth rate of 3.4 percent and real wage increases of 1.3 percent are also forecast for 2026. Most notably, it will be the first time in 21 years -- the first time since 2005 -- to see a jump in real wages of more than 1.0 percent, if we exclude 2021, a year seen as having special factors at play because of the COVID-19 situation. We will use the potency of our policies to transform these promising factors into a more powerful surge.

As we pursue growth to build a strong economy via responsible and proactive public finances, the most critical thing will be strategic investments that enhance resilience against potential crises. By that I mean strategic investments that the Government will implement preemptively, hand in hand with the private sector, to address various risks and social issues, including risks and issues in the areas of economic security, food security, energy and resource security, health and medical care security, national resilience, and cyber security. If Japan can expand into domestic and overseas markets its products, services, and infrastructure that contribute to the resolution of globally shared issues, it will lead to further economic growth for Japan.

One example of that is boosting supply chain resilience in semiconductors. I imagine many of you will recall that a few years ago, semiconductor shortages precipitated by the COVID-19 pandemic not only brought to a halt the production of automobiles, one of Japan’s core industries, but also obstructed people’s daily lives by, for example, making it impossible to repair water heaters. Investing in economic security means preventing these kinds of situations.

In addition, we are implementing the “Rapidus Project,” a national project pushing for Japan’s revival as a semiconductor powerhouse. This is an effort to enable Japan to produce 2-nanometer cutting-edge semiconductors domestically. Success in this endeavor will enhance Japan’s strategic position by reducing the risk of Japan depending on other countries for technologies that affect our daily lives, such as artificial intelligence (AI) robotics and autonomous driving, while also expanding our exports overseas.

The most important software running on semiconductor hardware is AI. The performance of AI hinges greatly on the kind of data used to train it. At present, the United States and China, which lead the world in this area, are using mostly language, image, and video data in their training activities.

Japan possesses an abundance of on-site data from both the public and private sectors in such fields as industry, healthcare, and logistics. In particular, by accumulating and then training AI on the high-quality data that has amassed over time in our manufacturing and service industries, where Japan possesses strengths, it will be possible for us to realize “physical AI,” which will enable robots to autonomously support humans or let factories engaged in precision manufacturing operate without humans. Japan will use this to make its mark on the world.

We will leverage over 10 trillion yen in public support under the AI and semiconductor industrial infrastructure framework and other funds and enhance predictability. This will promote public-private investments of over 50 trillion yen and achieve an economic ripple effect of roughly 160 trillion yen.

Next, I will touch on space-related technologies. In the case of the Noto Peninsula Earthquake, the quake struck at a time close to sunset and played havoc with roads and communications, making it difficult to grasp the extent of the damage. But with Synthetic Aperture Radar satellites, known as SAR satellites, an area in which Japanese startups possess world-class technologies, it is possible to obtain high-resolution images over broad areas, even at night or when weather conditions are poor. This makes them useful in assessing the state of a disaster.

Moreover, the use of SAR satellites and meteorology satellites will enable us to efficiently grasp the risk of water pipes leaking. This will lead to the strengthening of national resilience, as it contributes to the preventive maintenance of aging infrastructure.

We can look forward to many other kinds of use cases beyond these examples, in which our Michibiki satellite, which boasts the world’s most precise level of positioning capabilities, or analyses combining satellite data with AI, help us not only in the areas of defense and disaster prevention but also in ensuring food security, such as by monitoring the growth of crops, seeding rice directly by drones, and providing advice on efficient fishing methods and fishing grounds.

We will support these kinds of investments in the space sector through a Space Strategy Fund having a scale of 1 trillion yen and also by developing relevant rules through legal amendments.

To enhance food security, we will press forward with our efforts to create an environment in which all farmland can be fully utilized while also working to expand export markets for Japanese agricultural products and food items, thereby strengthening both demand and supply.

For example, Japan has the technology to produce rice flour that contains no gluten at all, meeting a stricter standard than what is called “gluten free,” [a label permitted even when gluten is present, if the amount falls below a certain threshold]. In consideration of the significant number of people suffering from wheat allergies, including in the West, we will expand our rice-flour-added processed foods, including pasta and pizza dough, into global markets.

In addition, both foodtech and agritech are important. We will promote investments into Japan’s world-class fully closed and controlled plant factories and land-based aquaculture facilities.

The use of these technologies will enable the stable production of agricultural and marine products, even in the cases of increasingly frequent natural disasters or changes in the natural environment, such as rising temperatures. 

There are still countless outstanding technologies and industries in Japan that will help carve out our future. We will build a society that is both secure and full of hope by investing in strategic fields, including through the popularization of both Perovskite solar cells originally developed in Japanese academic institutions and energy-efficient data centers and the promotion of fusion energy, an area in which Japanese companies possess core technologies, as well as quantum technology, biotechnology, and cybersecurity.

The foundation of Japan's strength as a nation is its human capital. The Takaichi Cabinet will work to strengthen our human capital.

The foundation of human development is education. We will enhance our instructional systems and the content of our curricula to improve the quality of our education. Alongside this, we will pursue reforms to public education as well as to high school education.

And, in order to unleash the latent power of the Japanese people, it will be vital for each and every citizen to flourish as they pursue their activities. Every Japanese person must play a central role in this nation. We will strive to create a society free of inequities based on gender, whether or not one has a disability, birth generation, region, or family circumstances.

Moreover, in order to reduce the need for people to leave their jobs because of child rearing responsibilities, children refusing to attend school, or nursing care duties, we will work to decrease the financial burden accompanying the use of babysitters and support services for household chores. We will also submit to the ordinary Diet session a bill to ease the economic burden associated with pregnancy and childbirth, including by making the costs borne by parents during standard childbirth essentially free of charge. Based on the Children's Future Strategy acceleration plan, which has a scale of 3.6 trillion yen, we will move forward with our efforts to fully implement a system under which all children are able to attend daycare centers and nursery schools. We will also promote support for children and child-rearing that harnesses the vitality of companies.

We will also reduce the burden borne by middle- and low-income earners as they struggle to pay taxes and social insurance premiums and ensure that their take-home pay increases in line with their earnings. To make that a reality, we will also call on the opposition parties to participate as we launch a National Council on this issue later this month. As for the comprehensive reform of social security and taxation systems, including designing a system for refundable tax credits, I aim to transcend the boundaries between the ruling and opposition parties and draw upon the wisdom of experts as we hold discussions on the matter and emerge with a conclusion.

During the ordinary Diet session, I will work for the enactment of the budget for fiscal year 2026, which will make all these reforms possible, and of various bills, including notably our revisions to the tax system. In particular, the passage of budget-related legislation will enable robust management of the economy integrated with the supplementary budget for fiscal year 2025 enacted at the very end of 2025.

Without political stability, it will be impossible to advance robust economic policies or press forward with strong diplomatic or security initiatives. Taking our coalition agreement with the Japan Innovation Party as the basis, I intend to seek cooperation from opposition parties, including the Democratic Party For the People.

In addition, there are the matters of revisions to the Imperial House Law and constitutional reform. Now, as we face a multitude of issues needing to be addressed, there is no time to stand still. As we stand here at the beginning of the year of the fire horse, which may develop into a watershed year, I feel very keenly that I must make this a year in which my administration firmly demonstrates political leadership.

Here in Ise, the first pulling of sacred timber to be used in the reconstruction of the Ise Jingu shrine buildings will be held this year as part of the preparation for the next Shikinen Sengu grand reconstruction ritual. By being rebuilt every 20 years, the Ise Jingu shrine has come to weave a history spanning 1,300 years. It has become eternal only through this process of renewal. 

It is precisely for the sake of safeguarding something that we must not shy away from challenges. In consonance with this, in 2026, I will again boldly take on challenges in order to safeguard people’s lives and livelihoods and pass down Japan’s proud national character faithfully to the next generation, who will be responsible for shaping the future. I have made that determination here in Ise, home to Ise Jingu shrine, with great resolve.

I will spare no effort in working to make 2026 a year of hope for all Japanese citizens. I will conclude my opening remarks here. I ask for your support in the year to come. Thank you very much.