A record-high ¥102.48 trillion ($1.3 trillion) in budget requests have been submitted for fiscal 2013 despite the need for fiscal discipline, the Finance Ministry said.
The requests for the year starting next April topped the previous record of ¥98.47 trillion for fiscal 2012 by about 4 percent. They comprise ¥98.00 trillion in general-account spending in areas ranging from welfare to national defense, and ¥4.48 trillion for reconstruction from the March 2011 earthquake and tsunami.
Ministries and agencies have also submitted requests for annual tax reforms, including the end of levies on vehicle purchases, to minimize the impact on household and business spending from the sales tax hikes in 2014 and 2015.
The Finance Ministry will trim the budget requests before drafting the initial budget by the end of December. It will finally come in around ¥90 trillion as Japan struggles to improve its fiscal health, already worst among the major developed countries.
The requests included ¥2.08 trillion to finance policy measures to stimulate economic growth, focusing on the environment, health and welfare, and agriculture, forestry and fisheries.
Requests for social security spending rose 12.6 percent from the previous year to ¥29.71 trillion, the biggest portion, amid the rise in the elderly population.
Requests for public works projects climbed 6.4 percent to ¥4.86 trillion, including measures to prepare for natural disasters.
The government also set aside ¥24.65 trillion for interest payments and other debt-servicing costs, up 12.3 percent.
The tax reforms, if implemented completely, would lead to a decline of ¥1.03 trillion in state revenues, unless the government finds alternative funding sources.
The tax requests, subject to debate by Prime Minister Yoshihiko Noda’s Democratic Party of Japan, centered on the abolition of the automobile weight and acquisition taxes.
The Ministry of Economy, Trade and Industry has long called for the elimination of taxes on vehicle purchases to support carmakers, which have been hit by slower exports caused by the yen’s persistent strength.
There were also requests to expand tax breaks for home buyers.
Noda vows extra budget
Prime Minister Yoshihiko Noda plans to compile a supplementary budget for fiscal 2012 to spur economic growth before the consumption tax hike.
“I will work to bring the Japanese economy out of deflation as soon as possible and revitalize it,” Noda said Wednesday at a Japan National Press Club open forum for the four candidates in the ruling Democratic Party of Japan’s presidential election.
Noda, who looks certain to be re-elected DPJ president, said the economy “could slow down without proper care,” and that “a supplementary budget will be needed at some point or another.”
Although a full-fledged stimulus package will be included in the fiscal 2013 budget, the government will examine whether it should be moved forward and what kind of measures it should take, he said.
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