TOKYO -- Japanese Prime Minister Shinzo Abe decided on Monday to delay a planned consumption tax hike by two and a half years until October 2019.
Abe came to the decision as both the ruling Liberal Democratic Party and its junior coalition partner, Komeito, have expressed willingness to accept the delay. The consumption tax rate is currently scheduled to be raised from 8% to 10% in April 2017.
Abe intends to introduce reduced rates for specific items such as perishables, a measure sponsored by Komeito, to cushion the impact of the tax hike when the rate is raised to 10%.
With the prime minister willing to push through his decision, the political row over whether to delay the tax hike will likely come to an end.
The prime minister communicated his decision to LDP Vice President Masahiko Komura and other officials of the ruling coalition at his office on Monday morning. He is expected to meet with Komeito leader Natsuo Yamaguchi at the prime minister's office later in the day to seek his approval. Abe is apparently rushing to build consensus among the ruling camp in hopes of announcing the decision officially at a press conference to be held on the last day of the current session of the Diet, or parliament, on Wednesday.
On Monday morning, Abe also met separately with LDP General Council Chairman Toshihiro Nikai and LDP Policy Chief Tomomi Inada.
After meeting with Abe, Komura told reporters that "the prime minister seemed quite determined" to delay the tax increase. An official from the ruling coalition said "the prime minister's plan will not change." Nikai told reporters that he "will fully support the prime minister's decision."
On the possibility of dissolving the lower house for a snap election to be coupled with the upcoming upper house election in July, Nikai said, "the prime minister seems to be thinking [about forgoing that]." He added, "that's what I understood."
Inada, however, told Abe during her meeting that "the tax rate should be raised next year, if only by 1%, and if [Abe is] to delay the hike, he should seek public understanding," indicating that he should call a snap election.
On Saturday, Abe held talks with Taro Aso, deputy prime minister and finance minister, and LDP Secretary-General Sadakazu Tanigaki. Both showed reluctance toward forgoing the tax hike and asked him to dissolve the lower house.
Chief Cabinet Secretary Yoshihide Suga said at a press conference on Monday that "the right to dissolve [the House of Representatives] is an exclusive prerogative of the prime minister."
Komeito's Yamaguchi, among others, has been calling on Abe to implement the tax hike as scheduled. But Yamaguchi said in a lecture on Sunday that he "would talk with [Abe]" should the need arise. In the end, "everyone would end up agreeing with the prime minister," a Komeito official said on Monday.