When the new transport minister began talking about solutions to the long-running and lingering problem of debts left over by the former Japanese National Railways, one word kept coming up: “taxes.”
Takao Fujii’s first Cabinet post comes as 28.1 trillion yen in debt towers above most of the country’s urgent problems. “We are at a critical moment,” Fujii said. “We must come up with a fundamental solution to the problem. We must not end up with a superficial and partial remedy.”
JNR was privatized and separated into seven group companies in 1987, by which time it was 37.1 trillion yen in debt. While 11.6 trillion yen of the debt was taken over by the JR group companies, the remaining 25.5 trillion yen — assumed by the government and thus, ultimately, by citizens — has continued growing because of high interest payments to the government’s Fiscal Investment and Loan Program, a major lender to the former JNR.
Also responsible has been the government’s inability to take any effective measures to deal with the problem. In fact, late last year the government decided to wait until this December to draw up concrete measures to solve the problem.
The latest bright idea was a ministry proposal to create a special account to handle the ballooning debt being held by Japanese National Railways Settlement Corp. and to transfer the repayments of government bonds from the country’s general account to the special account. But the 50-year plan is drawing criticism from the Finance Ministry because it does not contain measures to finance the repayments.
So what is the solution?
“We should not go for new taxes easily,” Fujii said. “But, if we have to depend on taxes, I can’t help saying that taxes should be levied in a broad and shallow way.”
No matter what solution the government settles on, Fujii stressed that first a public consensus must be reached. “The issue of responsibility surely exists,” he said. “If we propose without introspection such measures as new taxes and government bonds, it would merely draw criticism. “No matter what choice we make, we need to obtain understanding from the public,” he said.
As for other matters, Fujii said that disputes with the United States over Japanese port practices and civil aviation need to be solved quickly. Although the Transport Ministry has chaired talks among the Foreign Steamship Association, the Japan Shipowners’ Association and the Japan Harbor Transport Association for months, the concerned parties remain at odds over reform measures, which even Japanese shippers complain about.
In the aviation dispute, the U.S. and Japan will hold talks in Tokyo later this month in an effort to find a way out of the stalled negotiations. The U.S. is pressing for deregulated “open skies” while Japan demands stringent regulations to protect the domestic industry from competition. “I truly hope to solve these issues as soon as possible,” Fujii said. “While the U.S. is our ally, they are very tough in diplomacy and negotiations.”