Diet enacted the fiscal 1998 supplementary budget Wednesday night, paving the way for the long-awaited implementation of the government’s 16 trillion yen stimulus package.
The House of Councilors approved and enacted the general account supplementary budget, worth 4.65 trillion yen, a prerequisite to carrying out the stimulus package, the largest ever planned. Coupled with additional income and residential tax cuts, actual fiscal spending from the budget totals 6.1 trillion yen.
It calls for 1.4 trillion yen in income tax cuts and 600 billion yen in residential tax cuts. These temporary reductions are in addition to 2 trillion yen in cuts included in the fiscal 1997 supplementary budget, which have already been implemented.
The priming package, announced in April, also contains a 2 trillion yen tax cut for 1999. All the cuts are one-off.
Most of the fiscal spending in the supplementary budget will be financed by new issuances of government bonds, including 4.1 trillion yen in construction bonds and 2.01 trillion yen in deficit-covering bonds to cover tax reductions. The large-scale issuance of bonds will be made possible with the recently enacted easing of the Fiscal Structure Reform Law.
The fiscal 1998 extra budget includes 3.57 trillion yen for public works — 3.4 trillion yen for infrastructure improvement, including advanced telecommunication facilities and environmental protection programs, and 170.2 billion yen for postdisaster reconstruction projects.
Among other features, the supplementary budget contains 413.5 billion yen to stimulate transactions in real estate held by financial institutions as collateral, 297.2 billion yen for lending to small companies and 152.9 billion yen in extraordinary payments to the elderly and others.
In other Diet action, a nonbinding resolution calling on Prime Minister Ryutaro Hashimoto to resign was voted down Wednesday by Hashimoto’s Liberal Democratic Party and its former non-Cabinet allies — the Social Democratic Party and New Party Sakigake.
The resolution was jointly submitted earlier the same day to the House of Councilors by six opposition parties. The Democratic Party of Japan, Komei, the Japanese Communist Party and the Liberal Party agreed the previous day to take the collective action, citing a series of economic policy failures that the opposition camp claims has brought about the current recession.
They were joined by Shinshakai-to and Kaitaku Club.
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