The government should draw up, if necessary, an extra budget focused on information technology and new public projects later this year, Finance Minister Kiichi Miyazawa said Wednesday.
A decision to go ahead with such a pump-priming budget can be made in September, when gross domestic product data for the April-June term will be released, Miyazawa said in an interview following his reappointment.
He pointed to mixed signals in the economy, such as sluggish personal consumption and an apparent recovery trend in the business sector.
“At the moment,” he said, “a large-scale supplementary budget like those in the past does not seem to be necessary.”
But he said he would not mind more government spending if there is an urgent need for projects related to IT, urban infrastructure, environmental protection and the aging population.
“If we do prepare a (supplementary) budget, it would be different from traditional, stimulus-type supplementary budgets,” he said.
Any extra budget, he indicated, would be much smaller than last fall’s, which totaled 6.8 trillion yen.
Such thinking should also apply to government evaluation criteria for fiscal 2001 budget requests, to be set by the end of this month, he said. The ruling coalition’s new fiscal committee, of which Miyazawa is a member, will discuss budget guidelines.
He said that the economy is not so bad that a numerical target for public works projects is required in devising the guidelines.
Although the government cannot afford to begin reconstruction of its debt-ridden finances, he said, he wants to reduce the amount of government bond issues in fiscal 2001 compared with the previous year.
“Achieving that goal will lead to fiscal reconstruction,” he said. A total of 32.6 trillion yen in bonds will be issued in this fiscal year.
But in the long term, Miyazawa said, the government should draft wide-ranging policy options to overhaul fiscal workings such as the budget, taxes, the distribution of power between central and local governments, and most importantly, social welfare.
“Without devising such a macro model, public management for the next 10 years will be difficult,” he said.
On tax, he said lowering the minimum income threshold for personal income tax cannot be avoided in the future, adding, however, that he does not want such a move to take place in the next fiscal year, which begins in April 2001. Such a change would effectively raise the tax burden for people with low incomes.
“My basic position is that a large-scale reform of the tax system is not on the agenda for the next fiscal year,” he said.
Those “burden” issues cannot be discussed separately from “benefit” issues, he said, apparently referring to pension and other social welfare benefits.
The finance minister refrained from expressing an opinion on the Bank of Japan’s monetary policy, except to say that the central bank is ultimately responsible for deciding when to lift its controversial “zero-interest-rate” policy.
Miyazawa, who has previously served as finance minister and prime minister, accepted the finance portfolio in late July 1998 after persistent pleas from then Prime Minister Keizo Obuchi, who died in May.
His first and foremost mission has been seeing the nation out of its worst postwar recession and bringing it into a full-fledged recovery.