(Sankei: February 13, 2015 – p. 5)
Current state of Japanese economy, basic thinking in fiscal policy
A virtuous economic cycle is taking shape steadily. We will help promote the creation of self-sustaining communities in the regions by overcoming the population decline and through regional revitalization efforts. It is important to continue the trend of wage increases, improvement of productivity, and review of wage systems in order to sustain the virtuous economic cycle. We will put the Japanese economy firmly on the track of growth through corporate tax reforms, abolition of the bedrock regulations, and the implementation of other policies under the growth strategy.
We have worked on restoring fiscal health through economic growth on the one hand and revenue and spending measures on the other. In terms of revenues, we increased revenue income through efforts to realize a strong economy and the consumption tax rate was raised to 8% last April. With regard to expenditures, we did a thorough review with no exceptions, including the natural growth in social welfare spending. Japan is facing serious fiscal difficulties. The consumption tax increase to 10% has been postponed for 18 months and this will be implemented by April 2017. We stand by the goal to realize a surplus in the primary balance of the national and local governments’ finances by FY2020.
FY2015 budget and tax reforms
We have worked hard on measures relating to regional revitalization, child care support, and other issues and taken steps to thoroughly prioritize and improve the efficiency of fiscal expenditures through a review with no exceptions, including the natural growth in welfare spending. The total general account budget is about 96.3 trillion yen. Projected revenue income is approximately 54.5 trillion yen, while additional issuance of government bonds will amount to 36.9 trillion yen.
Utilizing increased revenues from the consumption tax hike, a new system to support children and child care will start from this April. Through a review of nursing care charges, the overall financial burden on users will be reduced, while compensation for care providers will be improved. Tax reforms for FY2015 will call for expanding the taxation base while lowering the corporate tax rate, in order to help make businesses more profitable and prod them to increase wages.
The budget needs to be enacted as soon as possible in order to realize a balance between economic revitalization and restoration of fiscal health, which are both at a critical stage. The key to this is whether the regions in Japan will be able to overcome the problems they are facing in an era of globalization and population decline.