News Budget woes: PM Kishida facing cabinet rebellion

PM Kishida's decision to raise the defence budget comes at a high price, literally: to finance the boost of the country's military spending to about 43 trillion JPY (USD 318 billion) for fiscal 2023 to fiscal 2027, an increase of over 50% from its current five-year spending plan, he suggested increasing the corporate tax, the tobacco tax, decreasing tax-free investment, taxing the wealthy and even dipping into the Tohoku Recovery Fund. Now members of his cabinet take to the barricades: one of his most hawkish ministers, Minister of Economic Security Takaichi Sanae, said she could not understand Kishida's intentions in making comments at this point that discourage wage growth.

Comments like these underscore the difficulty Kishida has had keeping his Liberal Democratic Party in line since the death of former Prime Minister Shinzo Abe in July left its largest faction without a clear leader to work with on policy matters. The conflict over funding risks bogging down the more fundamental debate over what types of capabilities Japan needs to counter the Chinese threat. Takaichi said that she had discussed the issue with Kishida on Monday and that both agreed a stable funding source was needed. She argued that the problem was timing: The government should wait and see how next spring's annual wage negotiations turn out before talking about a tax hike.

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I'm all for taxing the rich and the smokers, but why touch the funds allocated to the reconstruction of Tohoku?

The Tohoku Recovery Fund is a special tax designed to finance reconstruction costs for areas affected by the March 2011 Great East Japan Earthquake. This special income tax for reconstruction adds a 2.1% levy to individual income tax through 2037, generating about 400 billion JPY (USD 2.9 billion) in revenue for the government each year.

I hate politicians who spend my money like it's their own.

Uncle Frank said:

View attachment 99417I hate politicians who spend my money like it's their own.

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They don't spend it like its their own. They spend it like its someone else's.
I mean, when was the last time you saw a politician spend their own money?

What's baffling is that the PM committed to budget increases before asking his advisors, ministers, agencies, and whatnot whether the country can afford it. Currently, Japan's national debt rate is at a staggering 266% of GDP.

With general government debt equivalent to 262.5% of its gross domestic product in 2021, Japan has the highest debt-to-GDP ratio in the G-7, according to data from the International Monetary Fund. By this measure, Japan is far out in front of the U.S. at 128.1%, the U.K. at 95.3% and Germany at 69.6%. The G-7 group also includes Canada, France and Italy.

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It seems in today's world , money grows on printing presses and not trees.

I don't mind the uber-wealthy getting taxed heavily either, but in Japan's case I really think it is at the point of diminishing returns. Japan has one of the highest tax rates in the world, with the income tax, local tax, special disaster relief tax, and of course the consumption tax (not to mention the nickle-and-dime fees and surcharges for things like "proof of registration of inkan" etc...).

The rich can afford all of this, but the rich can also afford to find loopholes and weasel out of some of these taxes, or in the worst case they can find a safe haven to claim residency of, and get out of some of Japan's taxes altogether. The middle-class can't bear much more, and investors aren't going to be impressed with even higher corporate tax burden.

I don't know what the answer is. At least in Japan you get relatively crime-free cities, drinkable water, and national health care. But I feel Japan has reached the limits of its neglect of the macro economy. The disaster relief tax was a bitter pill, but everyone felt that some extraordinary measure was necessary to help Tohoku. I didn't realize it was in place until 2037. The government will need to get creative, or give up on a bigger military budget.

thomas said:

I'm all for taxing the rich and the smokers, but why touch the funds allocated to the reconstruction of Tohoku?

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But what's more important fixing Tohoku or purchasing some batteries of Patriot Missiles? (Hint, only one of those helps the American defense industry).

I'm not against increased military spending as such: it seems to be a sign of the times, as indicated by non-hawkish countries such as Germany announcing that they are increasing their defence spending. However, what really annoys me is that, apart from in 2009 when Hatoyama was briefly PM, there is never any suggestion that public spending in some areas may be wasteful and that all public spending should be carefully scrutinised for its benefit to society. That partly explains why Japan has ended up with most of its coastline and nearly all of its rivers encased in concrete - most other countries don't engage in such nonsense.

Lothor said:

That partly explains why Japan has ended up with most of its coastline and nearly all of its rivers encased in concrete - most other countries don't engage in such nonsense.

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Along with countryside expressways, tunnels, and other rural white elephants. All of it LDP kickbacks. However, where are the outraged masses?