Japan’s government plans to consider raising taxes to help fund a jump in defense spending a year later than previously stated, according to the latest draft of this year’s economic and fiscal policy plans seen by Bloomberg on Tuesday.
In December, Prime Minister Fumio Kishida’s government had stated in its annual tax code that hikes for funding defense should come at the appropriate time in 2024 or onward.
But the latest document handed to a ruling Liberal Democratic Party panel for approval showed that it can be done at an appropriate time in 2025 onward, and the decision can be made in "a flexible manner,” while considering non-tax income and other revenue streams.
If the latest version of the policy plans is approved by the LDP, it would go to its coalition partner Komeito before being brought to the cabinet.
Japan has set ¥6.8 trillion ($48.8 billion) for defense spending in this fiscal year, jumping from last year’s ¥5.4 trillion. The defense costs, which will account for around 6% of the total expenditure, have been at the center of debate by the ruling party.
Earlier Tuesday, Finance Minister Shunichi Suzuki told reporters Japan will flexibly decide when to begin raising taxes to cover the increase in defense spending, in comments that could take on extra weight if the premier calls an early election.