The government adopted a comprehensive stimulus package Thursday worth nearly 11 trillion yen in its latest bid to place the long-stagnant economy on a full-fledged recovery track.
Government officials, using the phrase “e-Japan” strategies, said the package is designed to encourage the growth of the information technology sector. They also said it is pointed at other core areas in Prime Minister Yoshiro Mori’s national revitalization plan.
The package was endorsed at a joint meeting of Cabinet ministers in charge of economic policies and the Government-Ruling Parties Budget Conference, held Thursday morning at the Prime Minister’s Official Residence.
|Details of the economic package
The following is a summary of Japan’s new economic package announced Thursday.
The government will:
* map out “e-Japan” strategies by the end of the year;
* establish a nationwide network of personal computers connecting more than 10,000 schools and community centers;
* train 7 million people in Internet basics;
* revise the Commercial Code to allow use of the Internet in shareholders’ general meetings and expansion of the stock option system;
* allow people to conduct some administrative government procedures online by the end of March 2004;
* make 50,000 additional households eligible for mortgage loans by the Public Housing Loan Corp.;
* raise the upper limit on the amount of unsecured loans that can be guaranteed under the government’s loan-guarantee program for small and midsize companies;
* make a decision at an early date over the planned reform in tax reporting systems on capital gains.
The package features so-called “real water” spending, direct fiscal outlays, of 3.9 trillion yen and calls for the spending to be financed by a bond issue, left-over funds from previous budgets and an expected increase in tax revenue. With local government outlays taken into account, total spending under the package will reach nearly 11 trillion yen.
The government plans to submit the extra budget to the Diet around Nov. 10.
“The stimulus package has two roles,” Economic Planning Agency chief Taichi Sakaiya told a news conference. “While the package is designed to accelerate economic recovery, it also marks the beginning of a new era.”
The “new era” Sakaiya was referring to — and which officials say the package is targeting — has been under way for several years, one marked by the explosion of information technology, the aging of Japan’s society, a growing need for urban redevelopment and an awakening to environmental problems.
In terms of total spending by both the central and local governments, some 4.7 trillion yen is earmarked for public works projects and other social infrastructure, including measures to deal with the four “new era” areas plus education, disaster prevention and other issues.
The central government allocated about 2.5 trillion yen from the extra budget to finance these projects.
IT-related projects, worth 1 trillion yen, include steps to establish an IT training system and IT infrastructure, including a fiber-optic network.
Projects in this area include one to establish a national network of personal computers connecting more than 4,000 schools.
Outlays were also made to train 7 million people on the basics of using the Internet.
In his policy speech to the Diet in September, Mori said the government will try to make Japan the world’s most advanced country in terms of IT in five years.
As for dealing with the aging population, the package pledges a “barrier-free plan” for train stations, under which access to train and subway stations will be improved for the elderly and disabled by the end of 2010.
On urban development, the package focuses on efforts to reduce traffic congestion in major cities and lay electric power lines underground to improve cityscapes.
The package also calls for establishing an environmentally sustainable society by promoting recycling. It also pledges to improve waste-processing facilities to effectively deal with dioxin.
In other areas, the government allocated 400 billion yen for relief measures in disaster-hit areas, including Miyake Island, which has recently experienced volcanic eruptions and earthquakes.
In addition, 800 billion yen was added to the current credit-guarantee system for small and midsize firms, bringing the total size of the guarantee framework to 4.5 trillion yen. This will expand the maximum amount each firm is entitled to borrow under state credit guarantees from the current 50 million yen to 80 million yen.
The stimulus package also underlines the government’s commitment to consider delaying a planned revision of capital gains taxes that would have amounted to an effective tax hike for many stock market investors.
It also underlines the need to consider a tax scheme that reduces the burdens accompanying corporate reorganization to help firms restructure and gain competitiveness.
Tax panels of the government and the ruling Liberal Democratic Party will consider these steps for their annual tax code revisions for the next fiscal year.
The package, however, does not mention extending a housing loan tax break or lowering the inheritance tax.
Although the LDP had lobbied to include a commitment to reconsider these measures, it is believed the Finance Ministry strongly opposed the idea.
Half of the 3.9 trillion yen extra budget will be covered by government bonds, but the government will issue only construction bonds, Finance Minister Kiichi Miyazawa said earlier this week.
It will be the first time in four years that the government does not issue deficit-servicing bonds in compiling a supplementary budget.
The Finance Ministry expects 1.24 trillion yen more in tax revenues for fiscal 2000 than its initial estimate largely because of an improvement in corporate tax revenues, Miyazawa said.
Of the 1.24 trillion yen, 800 billion yen will be set aside for the extra budget along with 1 trillion yen in surplus funds from the fiscal 1999 budget, Miyazawa said.
IT legislation package
The government on Thursday decided to submit to the current extraordinary session of the Diet a package of bills to revise 50 laws, which is aimed at smoothly introducing information technology to the office procedures of governments and the private sector.
The decision was made at a meeting of administrative vice ministers of all the ministries.
The package is designed to permit the use of electronic communications, such as e-mail and fax, for such procedures as the presentation of documents to government offices, confirmation of business deals and the exercise of voting rights at cooperative associations.
The 50 laws include the Securities and Exchange Law, the Construction Industry Law, the Law for Cooperatives of Small Businesses, the Law Concerning Door-to-Door Sales, and the Travel Agency Law.
The Diet session is scheduled to end Dec. 1.
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