Economic and fiscal policy minister Akira Amari on Tuesday urged ministries and agencies to cooperate in finalizing by early December an economic stimulus package aimed at easing the negative impact of next year’s sales tax hike.
“The new economic package would be aimed at preventing the consumption tax hike from hurting the economy and at bringing the economy back to a growth path as soon as possible,” Amari said at a press conference.
The package — the key pillars of which are strengthening industrial competitiveness and making infrastructure more resilient to natural disasters — will be worth ¥6 trillion, including ¥1 trillion in tax cuts to invigorate business investment, Amari said.
To fund the stimulus package, an extra budget for this fiscal year through March 2014 is expected to be compiled in mid-December.
Amari said Prime Minister Shinzo Abe’s government, which has pledged to promote fiscal rehabilitation, has no plan to issue additional bonds in fiscal 2013, as tax revenues are likely to grow on the back of the nascent economic recovery.
“I believe it would be possible (to finance the package) without issuance of new government debt,” Amari said.
The stimulus package will entail steps such as employment support for young people and women, as well as subsidies for smaller firms to accelerate reconstruction in areas ravaged by the March 2011 earthquake and tsunami, government officials said.
Under the supplementary budget worth ¥5 trillion, ¥2 trillion will be used for reconstruction work stemming from the 2011 disasters, which triggered the meltdowns at the Fukushima No. 1 nuclear power plant, the officials said.
In addition to new infrastructure investment ahead of the 2020 Tokyo Olympics, ¥300 billion will be allocated for cash benefits to people on low incomes and ¥360 billion will be earmarked for mitigating the burden on home buyers, they added.
Around ¥26 billion is expected to be utilized for the management of radioactive water at Tokyo Electric Power Co.’s Fukushima plant.
Legislation enacted last year stipulates the sales tax is to be raised from the current 5 percent to 8 percent next April and to 10 percent in October 2015.
The tax hike aimed at covering swelling social security costs for an aging population is widely regarded as crucial to Japan’s fiscal consolidation, as the country’s fiscal health is the worst among major developed nations, with public debt at more than 200 percent of gross domestic product.