A plenary session of the Lower House passed a government-proposed fiscal reform bill Thursday that will use wide-ranging measures to set reduction targets for key budget areas to slash the deficit.
The bill would oblige the government by fiscal 2003 to cut the fiscal deficit to 3 percent or less of gross domestic product and terminate deficit-covering bonds.
The vote was 266 to 209, with backing from the ruling Liberal Democratic Party and its non-Cabinet allies, the Social Democratic Party and New Party Sakigake. The bill was immediately sent to the Upper House for further action.
All opposition forces, including Shinshinto, the Democratic Party of Japan, the Japanese Communist Party and the Taiyo Party, voted against the bill. Kazuo Kitagawa of Shinshinto criticized the bill during the plenary session, arguing that it would put a damper on the already sluggish economy, which would result in less tax revenues and lead to further damage to the government’s fiscal health.
Kenji Kodama of the JCP charged that the quality of social security services would deteriorate if the bill is passed. Katsuhiko Shirakawa of the LDP said the nation must accept fiscal reform now so that future generations will not be buried under huge amounts of debt. Shirakawa stressed the need to improve the nation’s fiscal condition to secure growth in the medium to long term.
As of fiscal 1997, the combined fiscal deficit of the national and local governments is estimated at 5.4 percent of GDP, and 7.47 trillion yen worth of new deficit-covering bonds were issued for the current fiscal year.