The Cabinet on Friday approved an economic policy guideline for 2006 aimed at shoring up the government's woeful finances with spending cuts and tax revisions, but leaves the dreaded consumption levy hike for a later administration to deal with.
The guideline, which will be used to compile the fiscal 2007 budget, calls on the government to reduce spending by 11.4 trillion yen to 14.3 trillion yen in the next five years by slashing 1.6 trillion yen in social security costs, 2.6 trillion yen in civil service payrolls, and 3.9 trillion yen to 5.6 trillion yen from public works outlays.
It is estimated the spending cuts will cover more than 70 percent of the 16.5 trillion yen in cuts the government needs to achieve a surplus in the primary balance of the combined central and local government budget by 2011.