Finance Minister Jun Azumi referred Tuesday to the possibility of compiling by the end of December a fourth extra budget for this fiscal year to provide additional financing for March 11-related relief work.
“I will ask for a comprehensive decision” by Prime Minister Yoshihiko Noda if it becomes clear that the government has spare money under the initial budget for fiscal 2011, Azumi told a Diet committee.
The Diet on Monday enacted the third supplementary budget, worth ¥12 trillion, to mainly finance full-fledged reconstruction work following the natural disasters. The envisaged fourth budget would secure additional funds for some relief programs, according to government officials.
Also Tuesday, the Lower House Financial Affairs Committee approved a bill that would enable the government to temporarily raise some taxes and help finance the third extra budget.
The bill is expected to be passed by the full Lower House on Thursday before going to the opposition-controlled Upper House.
The administration is planning to increase individual income tax for 25 years starting in January 2013. It would also raise the corporate income tax for three years. However, it would first cut the levy, and the increase would not be bigger than the reduction — in effect supporting companies because Noda wants them to spend more in Japan, which is suffering from weak domestic demand.
Noda aims to use the funds generated from the planned tax hikes to service emergency bonds the government is to issue to pay for the third extra budget.
Defense ties OK: Fujimura
The Japan-U.S. security partnership is unlikely to be hampered anytime soon even if Washington slashes its defense spending in the wake of the failure of Congress to agree on deficit reductions, Chief Cabinet Secretary Osamu Fujimura said Tuesday.
Fujimura cited President Barack Obama’s address to the Australian Parliament last week, where he said reductions in U.S. defense spending will not come “at the expense of” the Asia-Pacific region and Washington will maintain its “strong presence” in Japan and the Korean Peninsula.
In addition, Fujimura emphasized at a news conference that even if the United States starts to make massive cuts in public spending, it would come the year after next.
The government “doesn’t think that (Washington’s cuts in defense expenditures) would affect (bilateral security ties) soon, like next year,” Fujimura said.
A U.S. bipartisan congressional panel gave up on reaching an agreement on spending cuts of $1.2 trillion by the Wednesday deadline due to the gap between the Democrats and the Republicans over how to trim the federal deficit, the two cochairs of the committee said Monday.
The congressional supercommittee’s failure to hammer out an accord will lead to an automatic $1.2 trillion spending reduction across the board over 10 years, including defense outlays, which would kick in from 2013.