Press Conference by the Chief Cabinet Secretary (Excerpt)

Q&As

(Abridged)

REPORTER:In relation to the tax increase for reconstruction, I would like to ask a question regarding the tax increase amount which is currently anticipated by the Government and the Democratic Party of Japan (DPJ). Does the Government and the DPJ intend to draft a bill stipulating the scale of 11.2 trillion yen or 9.2 trillion yen?

CHIEF CABINET SECRETARY FUJIMURA:First, regarding non-tax revenues to finance the reconstruction, the amount was tentatively set at 5 trillion yen in the initial discussions of the DPJ tax commission. Afterwards, it was agreed that non-tax revenues will be raised by another 2 trillion yen to 7 trillion yen. This agreement was reached between the Government and the DPJ yesterday. Let me read out a section of the agreement. "In order to secure the remaining funds for the five-year intensive reconstruction period," estimated at around 13 trillion yen, "time-limited tax measures will be taken on the basis of the assumption that around 5 trillion yen is needed, including non-tax revenues. The Government will make renewed efforts to secure financial sources through non-tax revenues and other sources, and when the amount of available financial sources is determined, the said amount will be incorporated into the financing framework during its review, and time-limited tax measures will be reduced. In particular, moving forward, based on a study of the preconditions regarding the sale of government-held shares in Japan Post Holdings Co., Ltd., Japan Tobacco Inc. (JT), and Energy Special Account , the Government will swiftly sell the shares available for sale. In principle, these initiatives will be taken over the next ten years. In this context, time-limited tax measures will be taken on the assumption of around 2 trillion yen," in other words, an additional 2 trillion yen, "need to be secured, excluding the sale of Japan Post shares." For the ten-year total, non-tax revenues, etc., will gradually amount to 7 trillion yen. As a result, the Government and the DPJ concluded in their agreement that the tax increase amount over the ten years will be worth around 9.2 trillion yen.

(Abridged)

REPORTER:To confirm, does this mean that the share of non-tax revenues is worth 5 trillion yen and the additional 2 trillion yen will depend on whether the efforts to secure additional financial sources go smoothly?

CHIEF CABINET SECRETARY FUJIMURA:It is not so obscure, as to say it is a matter of whether the efforts go smoothly. Over the next ten years, a total of 7 trillion yen will be secured.

REPORTER:I have a related question. The Government plans to submit a draft budget stipulating an initial amount of 11.2 trillion yen in total over the ten-year period. Instead of saying initially, I believe the Government can submit a budget which from the start stipulates that in total, over ten years, 7 trillion yen in non-tax revenues will be secured and the tax increase will amount to 9 trillion yen. What was the reason for not doing so?

CHIEF CABINET SECRETARY FUJIMURA:There are some items which will not become clear until a later stage. For example, this applies to JT shares and oil company shares. Right now, it is not known at what price the JT shares will be sold. Therefore, the final amount cannot be included in the initial budget. However, while we are starting off with the 5 trillion yen tentative amount established by the tax commission, I believe through careful examination a total of 7 trillion yen in non-tax revenues will be secured over the ten-year period.

REPORTER:In terms of the message you are sending to the people, instead of initially setting a high tax increase amount, I believe it might be better if the tax increase amount is initially set lower at 9 trillion yen over ten years, given also that we do not know what will happen in the future. Is there a reason why you did not choose this option?

CHIEF CABINET SECRETARY FUJIMURA:At this stage I cannot yet say which is better. I believe a final decision will be made through discussions between the ruling and opposition parties.

REPORTER:A moment ago on this subject, you said that the revenues from the sale of government-held shares cannot yet be determined. First of all, I believe some of them require legislative revisions, for example, JT. I believe the same logic applies to Japan Post. In that case, it seems that you cannot say with certainty that 2 trillion yen will be secured over ten years. How do you deal with this issue?

CHIEF CABINET SECRETARY FUJIMURA:Along with selling the shares, since we are talking about a ten-year period, naturally some extent of reductions, etc. can also be anticipated. Therefore, we are saying that as a starting point we will secure 7 trillion yen in total.

REPORTER:Then, does this mean that you are indicating a goal to strive to secure 7 trillion yen even if the legislative revisions for JT are to not go smoothly?

CHIEF CABINET SECRETARY FUJIMURA:The goal is not something we are striving for but what we will be achieving with certainty. The Japan Post shares are not included, and therefore, the outcome may also change depending on which comes first.

REPORTER:Related to this, when the ruling and opposition parties eventually start their discussions, it is possible that a decision will be made to further increase the 7 trillion yen amount of non-tax revenues or extend the reimbursement period. Is my understanding correct that the discussions will be carried out with this being a possibility?

CHIEF CABINET SECRETARY FUJIMURA:In Mr. Maehara's press conference, he stated that the income tax increase will in principle continue for ten years. While there is no talk about shortening this period, I infer that there is still room for negotiations regarding the period. As to the non-tax revenues, while the maximum amount has been presented, I believe it will be subject to negotiations.

REPORTER:The Government and the DPJ met yesterday and again met this afternoon. Why was there confusion within the administration regarding the contents of the agreement?

CHIEF CABINET SECRETARY FUJIMURA:As you just asked, I believe there was a section that was unclear in the statement which I read out a moment ago. Therefore, as Minister Azumi responded at this afternoon's Budget Committee meeting, the wording was made consistent to say that over a ten-year period, non-tax revenues, etc., will amount to a total of 7 trillion yen over several stages, and as a result, the tax increase amount will result in 9.2 trillion yen.

REPORTER:I have a related question. As of now, the Liberal Democratic Party (LDP) seems to be cautious about the discussions between the ruling and opposition parties. Once again, can you explain the Government's view on the necessity of the discussions between the ruling and opposition parties regarding the third supplementary budget and tax increase?

CHIEF CABINET SECRETARY FUJIMURA:This is one of the procedures based on the agreement among the three parties. Also, it is our wish that the Diet approves the budget swiftly, as quickly as possible, after discussions take place. Naturally, I believe the prior discussions between the ruling and opposition parties will take place in accordance with the three-party agreement.

(Abridged)

REPORTER:If I may slightly change the subject, I have a question regarding the people who are believed to be North Korean defectors who were found off the coast of Noto Peninsula several days ago. Can you tell us what the current status is and what is expected to happen next?

CHIEF CABINET SECRETARY FUJIMURA:The people are still being questioned in Omura in Nagasaki prefecture, first as a family, then in groups, and then individually, in order. As to what will happen next, as of today no specific plans have yet been decided about their future.