The government has pledged to drastically expand the budget to address the low birthrate and keep Japan’s population from falling below 100 million five decades from now, according to an outline of the new economic and fiscal policy blueprint.
Fears are growing that population decline will create a workforce shortage that will cause the nation’s economic and fiscal health to crumble.
“After beating deflation, the government will make efforts to implement budgetary, tax and regulatory reforms to create an environment in which the economy can achieve sustainable growth,” Prime Minister Shinzo Abe said during a meeting of the influential Council on Economic and Fiscal Policy on Monday.
In the outline of the administration’s longer-term policy blueprint to be finalized later in June, the government said it will increase spending to encourage couples to have three children or more. Japan’s total fertility rate — the average number of children born to a woman — stood at 1.43 last year.
“It’s important to support marriage, pregnancy, childbirth and child-rearing in a seamless manner” to avoid a sharp decline in the population, Abe said, expressing a desire to bolster support for women.
To restore the nation’s fiscal health, the worst among the major developed economies, Abe’s Cabinet promised in the outline to decide by the end of this year whether to finish doubling the consumption tax rate to 10 percent in October 2015 as planned.
The levy was hiked to 8 percent from 5 percent in April.
The government also restated its commitment to turning the primary balance — defined as annual tax and non-tax revenues minus outlays other than debt-servicing costs — into a surplus by fiscal 2020.
The blueprint did not include specific proposals on corporate income tax cuts, given that deliberations on tax reform among the parties concerned are still ongoing.