Press Conference by the Chief Cabinet Secretary (Excerpt)

Q&As

• The consumption tax increase
• The remarks of former Prime Minister Koizumi regarding nuclear energy
• The discussion with Mayor of Ginowan City and the 2+2 Meeting

REPORTER: Yesterday, the Prime Minister announced that the consumption tax rate would be increased to 8%. In making this announcement during his press conference, the Prime Minister underscored that wages will rise and employment will increase. In order to realize a positive cycle of the economy, how does the Government intend to translate increases in corporate earnings into increases in wages and employment? Can you please discuss the Government's specific measures if any?

CHIEF CABINET SECRETARY SUGA: Yesterday, the Prime Minister announced that the consumption tax rate would be increased from 5% to 8%. Yesterday, the Prime Minister presented a package of various economic measures to ensure that the increase in the consumption tax rate does not have adverse impacts on the momentum which has finally arrived to break free from deflation and on this best chance that the Japanese economy has right now. In this context, the Prime Minister also noted that the corporation tax will be reviewed. In any case, as the Prime Minister stated yesterday, corporate activities and individuals are not detached but move hand-in-hand. In this sense, the Government will take thorough measures to ensure that by breaking free from deflation first, this will ultimately lead to increased corporate earnings, which in turn will increase the incomes and wages of employees, and furthermore, increase employment.

REPORTER: You mentioned increases in wages and employment. However, before the financial crisis, the Japanese economy experienced robust growth, and corporate earnings increased. Nevertheless, the increases in corporate earnings accumulated as internal reserves and did not translate into positive outcomes for individuals. Instead, wages decreased, irregular employment increased, and stable employment did not necessarily increase. How does the Abe administration want to change these inter-linkages between corporations and individuals?

CHIEF CABINET SECRETARY SUGA: In a situation of deflation, accumulating internal reserves is the safest option for companies, is it not? Through Abenomics, which is entirely different from previous policies, the Abe administration will advance policies which will allow Japan to exit deflation and promote various investments.

REPORTER: In deciding to raise the consumption tax, the Government considered a variety of indexes, such as the Short-term Economic Survey of Enterprises in Japan (Tankan) of the Bank of Japan and the unemployment rate. Are there any indexes or figures which you will be monitoring with regard to the increases in wages and employment which you have noted moments ago?

CHIEF CABINET SECRETARY SUGA: Rather than figures, the ending special corporate tax for reconstruction one year ahead of the schedule and such factors were also taken into consideration. The Government will naturally explore measures in order to be able to grasp as much as possible how this would be reflected in the wages.

REPORTER: I am talking about, for example, what would be the figures if the internal reserves of companies decrease by such and such? For example, what would be the figures if wages increase by such and such?

CHIEF CABINET SECRETARY SUGA: I am unable to disclose specific figures. However, naturally, we will closely examine how wages would move.

REPORTER: On this same topic of the consumption tax, yesterday, during the press conference, the Prime Minister identified the stability of social security as a reason for the need to increase the consumption tax rate. In discussing the need for securing funding for the stability of social security on the one hand, I believe the Government cannot avoid the discussion about increasing the efficiency of social security payments in terms of maintaining fairness between generations. What are the prospects exactly for the Government's task of increasing the efficiency of social security payments, if any?

CHIEF CABINET SECRETARY SUGA: The comprehensive reform of the social security and taxation systems is a reform aimed at achieving the two objectives of ensuring stable financial resources for social security and achieving fiscal consolidation. In this context, it is stated explicitly in the Consumption Tax Act that if the consumption tax rate is increased, then all of the increased tax revenue would be allocated enhancing social security. In any case, we are now making every effort to submit the draft bill for the program during the next Diet session in consultation with the ruling parties.

REPORTER: Prime Minister Abe stated yesterday in a TV program that before deciding on whether to increase the tax rate to 10%, he would like to make a decision regarding the application of a reduced tax rate on food and other products which would accompany the consumption tax increase. The application of the reduced tax rate is something your ally party, the New Komeito Party, has been seeking from before. At this moment in time, what is your opinion regarding whether or not a reduced tax rate will be applied?

CHIEF CABINET SECRETARY SUGA: First of all, it has not even been decided at all whether or not the consumption tax would be increased to 10%. Yesterday, it was decided that the consumption tax would be increased to 8%. I believe these matters will be examined in the forthcoming discussions.

(Abridged)

REPORTER: I believe the law stipulates the increase of the consumption tax to 10%. Do you believe that this will be an even tougher decision than the one to increase the consumption tax to 8%?

CHIEF CABINET SECRETARY SUGA: Yes, it is true that that is written in the law. However, there is also a provision which states that the economic situation will be taken into consideration. Yesterday, we made a decision to increase the consumption tax by 8%, and I believe it is not appropriate for me to immediately make a comment on this at this current stage.

REPORTER: I would like to ask a question regarding nuclear power stations. I asked a similar question the other day, but if I may ask one more time. Yesterday, former Prime Minister Koizumi stated in his speech in Nagoya that the Government should make a decision quickly to realize zero nuclear power stations. What is your reaction to this?

CHIEF CABINET SECRETARY SUGA: I am aware that former Prime Minister Koizumi has made such remarks on various occasions. However, speaking from the position of the Government, it is the basic perspective of the Government to establish responsible energy measures in view of ensuring a stable supply of energy and reducing the energy cost. Prime Minister Abe too has said that in this context, he will reduce our dependency on nuclear power as much as possible. At this current stage, it is the position of the Government to consider to what extent it can reduce dependence on nuclear power which is stable in terms of supply and inexpensive.

REPORTER: Do you or people around you have any feelings against Mr. Koizumi saying these things after he has stepped down, even though he was naturally promoting nuclear power stations when he was Prime Minister?

CHIEF CABINET SECRETARY SUGA: We have freedom of speech in Japan. It is natural for people to change views. I think it is fine to have a variety of discussions. There are many former Prime Ministers who make various remarks.

(Abridged)

REPORTER: I believe that a short while ago the Mayor of Ginowan City visited you. To the extent that you are able to, could you please tell us what you two discussed?

CHIEF CABINET SECRETARY SUGA: The West Futenma Housing area is one of the candidates for areas which will be returned to Japan at the earliest timing. In this context, the Mayor and I discussed how the Government can cooperate and work with Ginowan City for the relocation of Futenma Air Station and promote town development, all the while listening to the views of the people in Ginowan City and in Okinawa regarding how to make effective use of this land.

REPORTER: A meeting of the Japan-U.S. Security Consultative Committee (2+2 Meeting) is set to be held on the 3rd. Naturally, I believe that the topic of reducing the burden of the bases on Okinawa will be a major item on the agenda. How do Japan and the United States (U.S.) plan to lay out a roadmap regarding this?

CHIEF CABINET SECRETARY SUGA: First of all, the 2+2 Meeting will be the first opportunity for the current four ministers from both the foreign and defense ministries of Japan and the U.S. to meet in Tokyo. The Abe administration highly welcomes this opportunity. At the meeting, I believe that naturally, discussions will take place on such matters as future security and defense cooperation and the realignment of the U.S. Forces in Japan, amid the dramatic changes taking place in the security environment of the Asia-Pacific region. Japan's position is to work with the U.S. and make every effort aimed at reducing the burden on Okinawa, while maintaining the deterrence of the U.S. Forces in Japan. During the 2+2, Japan hopes to discuss these matters and make steady progress.

REPORTER: During the 2+2, how will you be moving forward with the relocation of the U.S. Marine Corps stationed in Okinawa to Guam, which is currently at a standstill?

CHIEF CABINET SECRETARY SUGA: With regard to the relocation to Guam, the budget for this is now being deliberated in the U.S. Japan's position is to closely monitor the developments of the deliberations. In any case, Japan will work closely with the U.S. to ensure that this does not have any impact on the progress of the overall Guam relocation project.

REPORTER: Going back to the topic of the consumption tax, in parallel with the efforts to increase the tax rate, efforts to reduce the number of seats in the House of Representatives and reforming the electoral system, that is, reforms which put Diet members themselves on the line, have also been promoted at the Diet. With regard to the electoral system, the Prime Minister has proposed the establishment of a third-party entity but this has not made any progress. How will the Government be promoting these efforts going forward, including making appeals to opposition parties?

CHIEF CABINET SECRETARY SUGA: We consider what you have just raised as critically important matters. The Government, or rather, we, the Liberal Democratic Party, will proactively pursue these efforts.