As opposition groups urged for a cut, Prime Minister Kishida remained firm in his promises to keep Japan's sales tax at its present level, backing a policy they believe will boost popularity in an election less than two weeks away.

At a meeting of party leaders, Kishida argued that keeping the present tax rate of 10% was necessary to fund social security. He also maintained his position that government bonds should be utilised for emergency funding to aid the recovery of the economy following the Covid pandemic.

Japan Prime Minister: Fumio Kishida Approved As Japan's Next Prime Minister

The main opposition Constitutional Democratic Party's leader, Yukio Edano, has called for a reduction in the consumption tax. He also supports raising the capital gains tax and increasing taxes on the wealthy.

Prior to the October 31 election for control of the powerful House of Representatives, polling over the weekend showed Kishida's ruling Liberal Democratic Party in the lead. The LDP coalition appears to retain its majority.

Kishida reiterated that growth and wealth distribution were equally vital parts of his economic strategy. Changes to the capital gains tax and corporate income tax are essential areas for wealth distribution discussions, but he didn't say how to tackle them.

Many voters consider the LDP, which has ruled Japan for all but four of the last 66 years, to be the most stable hand in guiding security and economic policy. In a poll, nearly 30% of respondents said they planned to vote for the LDP in the proportional representation section of the election, compared to less than 10% for the CDP.

Kishida's election promises have centred on the creation of a "new capitalism," in which the benefits of economic growth are shared more widely. 

Following the market backlash, the new prime minister has distanced himself from an earlier proposal to raise the capital gains tax on securities investments.