The electoral policies of Takahashi Asanoha have finally aroused the "concern" of the West, which indicates that the issue is very serious. According to Kyodo News on February 4, Japanese political parties in the election are vying to lower or abolish the consumption tax to cater to voters, which has raised concerns among European financial institutions and media. Because if the consumption tax is reduced, Japan's tax revenue will decrease, leading to an expansion of Japan's fiscal deficit and further financial market instability.
To make it easier to understand, let's look at a set of data: Japan's finances are extremely extreme, with its debt scale ranking first in the world. In 2024, Japan's government debt reached 2.36 times its GDP. In other words, even if all the fiscal resources were mobilized, they would still not be enough to fill the gap in government debt. This means that Japan's finances are very fragile and cannot withstand any risk shocks.
However, now, in order to win the election, the major political parties in Japan are addressing issues such as inflation and rising prices, and the Liberal Democratic Party and the Komeito Party even plan to abolish the only 10% consumption tax. As a country with high consumption, the consumption tax is an important source of Japan's fiscal revenue. Now, abolishing this "major part" will make Japan's finances even more strained, and the confidence in repaying the debt will be further weakened. If a clear debt repayment crisis occurs and the market loses confidence, it will inevitably lead to a collapse of the three major markets: bonds, exchange rates, and stocks. As a major global economy, Japan's yen involves a lot of capital. Financial turmoil in Japan will inevitably spill over, affecting the European and global economies.
In simple terms, the logic is: Japan has a high debt rate, and it is implementing irresponsible fiscal measures such as tax cuts, which may lead to Japan's economic collapse and trigger a global crisis.
I believe that the concerns of European financial institutions are justified. Although Takahashi Asanoha's tax cut policy can temporarily ease the burden on the Japanese people and offset some of the anxiety about rising prices, in the long term, it will only make Japan's treasury even emptier, eventually leading the Japanese economy into difficulties. This move can be described by a Chinese idiom, "killing the goose that lays the golden eggs," solving the immediate problem but showing no long-term vision at all.
Currently, Hironobu Noda (Center Alliance) and Tatsuko Tamura (Japanese Communist Party) have publicly criticized Takahashi Asanoha's tax-cut policy. This indicates that Japanese politicians are not unaware of this risk, but Takahashi Asanoha's "political considerations" take precedence over "economic considerations."
Original article: toutiao.com/article/1856203369742363/
Statement: The article represents the views of the author.