A senior ruling-party LDP official said Japan's BOJ ETF holdings could be used
to help fund a planned cut in the food consumption tax, signaling the central
bank's large equity holdings are becoming a political target. Prime Minister
Takaichi has ruled out financing the tax cut with new debt and seeks non-tax
revenue to fill an estimated annual shortfall of about 5 trillion yen
(≈$31.7bn). Daishiro Yamagiwa, deputy head of the LDP tax research council, said
proceeds from selling the BOJ's roughly 37 trillion yen of ETF holdings could be
considered. At the BOJ's current disposal pace of about 330 billion yen a year,
Yamagiwa noted it would take roughly a century to liquidate the position and
suggested accelerating sales while equity prices are high. The BOJ says it is
selling ETFs gradually to avoid disrupting the stock market.
