Soaring Prices and Heavy Tax Burdens Hit Japanese Households
In recent years, Japan has seen a continuous rise in the prices of food and energy, directly impacting household budgets.
On top of this, the burden of taxes and social insurance premiums has grown heavier, with many describing the situation as a “tax hell.
” The national burden ratio (the combined share of taxes and social insurance premiums relative to national income) has reached 48%, comparable to the “goko-gomin” (half for the lord, half for the people) tax rate of the Edo period.
“Wages aren’t rising, but everything is getting more expensive. It’s hitting people’s lives hard.”
Amid these circumstances, especially for middle- and low-income groups, the combined impact of rising prices for essentials and increased taxes/social insurance premiums has sharply reduced disposable income.
Each increase in the consumption tax has pushed prices even higher, making life even tougher for ordinary citizens.
2025 Upper House Election—Tax Cuts Take Center Stage
In the 2025 Upper House election, tax cuts have become a major issue as a response to soaring prices. Each political party is offering different approaches:
- Opposition parties (Constitutional Democratic Party, Japanese Communist Party, etc.)
Propose temporary or even permanent cuts to the consumption tax, or reducing the tax rate on food to zero, to ease household burdens. - Ruling coalition (Liberal Democratic Party, Komeito)
More cautious about tax cuts, instead favoring measures such as a one-time cash handout of 20,000 yen. - Japan Innovation Party, Democratic Party for the People
Advocate lowering the consumption tax to 5% and tax cuts for young people and the middle class.
Surveys by NHK and others show that many citizens see tax cuts as the top priority for the government.
Tax Reform and Future Challenges
Currently, the burden of the consumption tax and social insurance premiums continues to squeeze household finances, and fundamental tax reform is needed.
While consumption tax cuts and income tax reforms could provide immediate relief from high prices, securing funding and maintaining a sustainable social security system are major challenges.
Summary
- Japan faces a “tax hell” with soaring prices and heavy tax burdens.
- The 2025 Upper House election sees tax cuts as a central issue, with parties competing on their policies.
- Fundamental tax reform and sustainable fiscal management are needed to protect citizens’ livelihoods.
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