Costs for holding the Olympic and Paralympic Games have been pressuring the finances of the Tokyo Metropolitan Government, which have already been eroded due to coronavirus measures.
Of the overall Tokyo Games costs totaling ¥1.6 trillion, the metropolitan government will shoulder ¥717 billion, including additional costs incurred due to the postponement of the events by one year.
The metropolitan government has spent over ¥2 trillion to fight the epidemic while expecting weaker tax revenue, leading to concerns among officials over the capital’s finances.
“We’ve given the right amount of focus to priority issues amid tight finances,” Tokyo Gov. Yuriko Koike said Monday as she completed her review of a fiscal 2021 budget plan featuring general-account expenditures of ¥7.4 trillion, the second highest on record for the metropolitan government.
She said the metropolitan government does not have to take account of additional Tokyo Games costs in the budget plan. The additional costs, totaling ¥120 billion, will be covered mainly by surplus funds carried over from fiscal 2019.
Still, the extra costs will limit the ability of the metropolitan government to spend.
The metropolitan government forecasts a decrease of ¥400 billion in fiscal 2021 tax revenue from the previous year, or nearly 10% of about ¥5 trillion in annual tax revenue in recent years.
As the capital is not entitled to tax grants from the central government, it will have to cover any revenue shortfall with bond issues.
The metropolitan government is also facing the possibility of its savings being exhausted after it dipped into the funds repeatedly to finance coronavirus relief measures such as aid to businesses.
The balance of savings fell from over ¥900 billion in March last year to ¥121.4 billion as of Jan. 8 this year, the lowest level since fiscal 2003, when the metropolitan government was tackling fiscal reconstruction.
Tokyo’s ticket revenue from the Olympics and Paralympics could be heavily affected if seating capacity at the games venues are reduced to help avoid the spread of the virus.
If demand from visitors from abroad also remains weak, the metropolitan government will experience a prolonged slump in tax revenue.
“We don’t know how far we have to go in a dark tunnel,” a senior official said.
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.
Your news needs your support
Since the early stages of the COVID-19 crisis, The Japan Times has been providing free access to crucial news on the impact of the novel coronavirus as well as practical information about how to cope with the pandemic. Please consider subscribing today so we can continue offering you up-to-date, in-depth news about Japan.