Tax revenue will likely see a shortfall of some 2.7 trillion yen to 2.8 trillion yen for the current fiscal year, it was learned Wednesday — a situation that makes the compilation of an extra budget increasingly likely.
Finance Minister Masajuro Shiokawa was quoted as telling the day’s meeting of the Liberal Democratic Party’s Research Commission on the Tax System that tax revenue for fiscal 2002 is likely to fall short of its initial budget estimate of 46.8 trillion yen by about 2.7 trillion yen to 2.8 trillion yen.
Shiokawa was explaining the current situation regarding tax revenues in the general account to the commission, which is to conclude tax system revisions for fiscal 2003 around mid-December, according to Hideyuki Aizawa, a senior politician who chairs the LDP’s powerful tax commission.
The figure is being closely watched, as Prime Minister Junichiro Koizumi and other government officials have indicated that the decision on whether a supplementary budget is necessary will be based on tax revenue. The extent of the shortfall is also likely to become the basis for a decision on whether to lift a 30 trillion yen cap on new government bond issues, a pledge made by the prime minister amid the nation’s dire fiscal situation, if and when the extra budget is compiled.
Later in the day, however, Chief Cabinet Secretary Yasuo Fukuda told a regular news conference that the estimate Shiokawa gave is probably just the minister’s “hunch,” saying that the official estimate for tax revenue is expected to be released later this month.
“We will not consider issuing any (new government bonds) based on that. I am sure we will obtain accurate information eventually,” he added.
The lower-than-expected tax revenue for fiscal 2002 stems from lower revenues from the corporate tax and the consumption tax, reflecting the prolonged stagnant economy, according to another senior member of the LDP commission.
In fiscal 2001, which ended March 31, tax revenue fell below an initial budget by 1.7 trillion yen. Since fiscal 2001 tax revenue serves as the foundation for the fiscal 2002 budget, the government had automatically shouldered a 1.7 trillion yen revenue shortfall in the initial budget for fiscal 2002.
On top of this 1 yen.7-trillion shortfall, tax refunds to companies are estimated to come to some 500 billion yen for fiscal 2002, according to Aizawa. Companies receive tax refunds in fiscal 2002 for what they overpaid in corporate taxes at the time of they closed their books for the mid-term of fiscal 2001.
Although many companies pay the corporate tax for the first half of a business year after closing their midterm earning reports, they get tax refunds for overpayment after closing their books for the full business year. For the government, these tax refunds to companies are factored into the tax revenue for fiscal 2002.
Other tax revenues are also expected to fall short of initial government estimates, Aizawa said.
Similarly, the tax revenues of local governments are expected to fall “considerably” short of an estimate in the fiscal 2002 initial budget, Aizawa added.
In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.