The original draft budget compiled by the government exceeds 100 trillion yen, the biggest ever. The scale is huge, combined with a figure of the second supplementary budgets counting approximately 3 trillion Yen of the Fiscal 2018. Expenditure is appropriated to strengthen military capabilities to respond to the new Defense Guidelines and to encourage the fourth-round of productivity revolution declared in the Fourth Industrial Revolution program. The Abe administration continues to run politics outrageously.

SPENDING ON MILITARY BUILD-UP AND ON PRODUCTIVITY UPSURGE

Consumption Tax - Major source of revenue

The budget counts 101 trillion 456.4 billion Yen at the initial phase, which records the largest among the seven consecutive figures. Elements to support revenues depend on the issue of new government bonds counting 32 trillion 659.8 billion Yen and a surged consumption tax rate. Revenue from the consumption tax is estimated as 19 trillion 392 billion Yen, including 1 trillion 300 billion Yen coming from the increased portion of its rate, which is to be 10% and implemented in October this year. It is certain that revenue from the consumption tax will reach a digit of 20 trillion Yen in the Fiscal 2020, which exceeds a total of the income taxes to become the largest incoming source. Corporate taxes, in contrast to the consumption tax, will enjoy reductions once again to pursue boldly the so-called productivity revolution in the name of R&D.

Abe government builds up military capabilities

The government compiled new defense guidelines in the cabinet last December. Military expenditure has been heightened as it emphasizes ‘space/cyber/magnetic-waves and proactive/independent defense posture’, which characterize the new military policy.

The Ministry of Defense will have a budget of 5 trillion 257.4 billion Yen, which is the seventh consecutive growth. In addition, another 2 trillion 401.3 billion Yen will be allocated later this fiscal. Furthermore, a supplementary budget accounting 399.8 billion Yen, the largest in the history, will be appropriated. On space development 89.6 billion Yen will be spent as a cost for cross-domain operation. For a field of cyber 22.3 billion Yen will be allocated. On the R&D of future fighter jets, 6.5 billion Yen will be spent. Military expenses increase straightly year after year, seen in 355 billion Yen for the ballistic missile defense plans and 70 million Yen for a research work to modernize the Izumo, a destroyer, to be an aircraft carrier.

In the broader context 78.8 billion Yen, by an increase of 16.8 billion Yen, is allocated for development of satellites to collect information, including supplementary budgets. For the quasi-zenith satellites system 41.4 billion Yen is allocated, including supplementary ones, by an increase of 26 billion Yen. These expenses constitute infrastructure to sustain the Self Defense Forces (SDF) and the US-Japan Alliance.

As for the Japan Coast Guard, which is under reorganization for a secondary SDF, enjoys its largest ever budget, 210.6 billion Yen. A new, big patrol boat will be constructed and 200 new personnel will be recruited. A generous financial plan is provided to build up a strategic maritime police system, accounting 28.2 billion Yen of the supplementary budgets.

Productivity Revolution

Chairman Nakanishi Hiroaki of the Japan Business Federation (Keidanren) welcomed enthusiastically the government’s draft budget, saying that many, necessary measures are incorporated to ensure an environment to proceed with innovation. Approximately a total of 10.8 billion Yen is allotted on development of the 5G high-speed mass communication technologies and the IoT area to collect information on things. On development of next-generation super computers 30.8 billion Yen (an increase by 25.2 billion Yen) is spent, including supplementary budgets, and on researches of high-risk and high-impact schemes 88.1 billion Yen (an increase by 82.6 billion Yen) is ready, including supplementary budgets. Subsidies for research activities are increased by 13.6 billion Yen in terms of training young researchers. The business community and high-ranking bureaucrats are closely allied with the Abe administration.

Let’s counter-attack Abe government!

As for social services, the budgets shrank as much as by 120 billion Yen in terms of a natural growth of expenditure. The government prepares for some measures to cope with the planned surge in the consumption tax rate, including a point-back program, but its true intention lies in building up a cashless transaction custom and a digital-oriented society.

The new Defense Guidelines, which proclaim ‘military capabilities to be built up with an unprecedented pace’, will lead soon to reductions in the budgets for public services, while the productivity revolution will produce harsher social gaps and spread anxieties in people’s life.

Let’s object the draft budget. Let’s win in the scheduled election of the House of Councilors with united efforts of opposition forces. Let’s realize a society in which constitutional principles should reflect in politics.

January 22, 2019