Ally of Japan’s Premier Calls for Capital Gains Tax Hike to 25%

08 Oct 2021, 06:55 PM IST

(Bloomberg) -- An ally of new Japanese Prime Minister Fumio Kishida said capital gains tax could be raised to 25% from the current 20% without affecting stock prices, just as the premier prepares to make his first policy speech in parliament.

Kozo Yamamoto, a veteran member of Kishida’s faction of the ruling Liberal Democratic Party, also told Bloomberg more than 30 trillion yen ($269 billion) in fiscal spending was needed to help the economy recover from the effects of the coronavirus pandemic.

The new premier will lay out his policy program in parliament Friday, in a bid to overcome weak public support and secure victory for his ruling coalition in an election in three weeks’ time that could set the tone for his term in office.

“For shareholders to take everything is absurd,” said Yamamoto, a former Finance Ministry official with an MBA from Cornell University. Reviewing capital gains tax would be a symbolic move in correcting income disparities, he said, adding that research indicated a rate of 25% wouldn’t be harmful.

Kishida has emphasized the need to share the fruits of economic growth by raising salaries and capital gains tax -- a policy line that hasn’t so far resonated with the public and has been blamed for a tumble in Japanese equities.

For more on Japanese politics:
‘Kishida Shock’ Hits Japan Markets Wary of Redistribution Plan Japan’s Kishida Gets Lowest Support for a New Premier Since 2008 Japan Touts New Capitalism But New Finance Chief Sounds The Same Japan’s Kishida Appointed Prime Minister, Calls Oct. 31 Election

Surveys published this week showed Kishida got a relatively weak boost in approval for a new leader after he took office Monday, with one poll indicating the lowest level for an incoming premier since 2008. The Nikkei 225 Average went on an eight day losing streak that ended Thursday -- the longest such run since 2009.

While none of the opposition parties currently boast support of more than single figures, they are combining efforts in many constituencies, seeking to chip away at the ruling coalition’s majority. A major loss of seats would increase the odds that Kishida is dispatched through the “revolving door” that claimed six premiers between 2007-2012.

Kishida has already promised to spend tens of trillions of yen on measures to help the economy bounce back after a virus state of emergency was lifted at the end of September. He has also said he’ll set up a panel to find ways to better distribute the rewards of growth and reduce income disparities in what he called a “new capitalism.”