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Diet OKs ¥13 trillion stopgap budget

Kyodo

The Diet on Friday passed a ¥13.2 trillion stopgap budget for fiscal 2013 to fund the government’s spending for 50 days from Monday, with the principal budget unlikely to be enacted before May.

The provisional budget, the biggest of its kind ever passed in the Diet, was approved at the Upper House with the backing of the main opposition Democratic Party of Japan. The Liberal Democratic Party-New Komeito ruling coalition lacks a majority in the chamber.

The enactment of the fiscal 2013 annual budget has been delayed since the LDP-led government was only formed Dec. 26 following the general election earlier that month, setting back the budget drafting process.

Of the stopgap budget, ¥5.43 trillion will go on social security spending. The measure includes ¥3.67 trillion in grants to local governments and ¥1.54 trillion for public works projects, the Finance Ministry said.

On Friday, a tax reform bill for the next fiscal year was also passed in the House of Councilors, again thanks to backing from the DPJ.

The reforms enacted center on reducing corporate tax by a set amount when a business increases its payroll or spends on new equipment designed to curb energy consumption.

As the government plans to increase the consumption tax to 8 percent from 5 percent in April 2014, it is looking for ways to ease the impact of the hike on consumer and corporate spending. The planned reforms also include extending tax cuts for those with mortgages and raising the maximum tax cut threshold.

The LDP administration will also exempt from taxation monetary gifts from the elderly to finance the education of their grandchildren as part of its economic stimulus, aiming to tap the huge financial assets held by people in this age group at a time when the population is rapidly aging.