The Lower House on Nov. 10 passed the supplementary budget for fiscal 2011 to finance reconstruction from the March 11 disasters. This week the Upper House has started deliberations on it. Both the extra budget and related bills are expected to be enacted by the end of the month. But more than eight months have passed since the disasters happened. The government and lawmakers must make serious efforts to accelerate reconstruction.

The ¥12.1 trillion budget outlays ¥9.24 trillion for the reconstruction, including ¥245.9 billion to clean up areas contaminated by radioactive materials from the nuclear power plant, ¥1.56 trillion in grants for such purposes as helping disaster-hit municipalities move communities to higher ground, and some ¥2 trillion to help business enterprises secure locations for production and other activities.

Of the budget’s sum, ¥11.55 trillion will be covered by bonds. To help redeem the bonds, people will have to pay 2.1 percent more income tax for 25 years from January 2013. The residential tax will be raised by ¥1,000 annually for over 10 years.

The government estimates that ¥19 trillion will be needed by the end of fiscal 2015 for reconstruction purposes — ¥10.5 trillion of it to be covered by tax increases and the rest through nontax revenues. An estimated, additional ¥4 trillion will be needed for five years from fiscal 2016.

The Diet must closely examine the estimates to determine whether the amount has been unnecessarily padded. It should also scrutinize major reconstruction projects to ensure that they are necessary — in particular the rebuilding of breakwater systems that, while elaborate and expensive, nonetheless failed during the March 11 tsunami — and weed out those that are not.

In a session of the Lower House’s Budget Committee on Nov. 10, Prime Minister Yoshihiko Noda hinted that a fourth supplementary budget for fiscal 2011 may be needed to help people in the disaster-hit areas. The previous day, he told the same committee that as far as reconstruction efforts are concerned, he will try to refrain from further tax increases.

Even so, the government plans to raise the consumption tax rate from the current 5 percent to 10 percent by the middle of the 2010s to secure social welfare funds. People may put up with tax increases if persuaded by the government. But they will tighten their purse strings, thus negatively affecting the economy. The government must carefully consider the effects of that.

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