THE ASAHI SHIMBUN
December 8, 2022 at 16:30 JST
The Defense Ministry in Tokyo’s Ichigaya district (Asahi Shimbun file photo)
Corporate tax increases are on the table to help fund the massive defense buildup ordered by the prime minister, sources said, but officials are signaling there are no plans for any immediate hikes.
That comes as senior bureaucrats start to flesh out where they intend to find the extra 17 trillion yen ($124 billion) to finance the new five-year defense spending plan.
Government officials informed top brass from the ruling coalition at a meeting on Dec. 7 that they are exploring four main avenues to secure the necessary funds, but will place priority on three to ease the burden on taxpayers.
That means they will initially be focusing on reforming spending, using unspent funds from other areas and setting up a new fund to strengthen defense capabilities.
Any funding gaps that remain will have to be covered by new tax measures, although officials emphasized that they do not plan to increase taxes for fiscal 2023.
Government officials explained that in fiscal 2027, the final year of the five-year plan, they will need to secure about 4 trillion yen more than in a normal year.
One ruling coalition official who attended the meeting said the government will likely need to come up with 1 trillion yen for the final year of the plan from each of the four revenue sources.
The ruling coalition’s Research Commission on the Tax System will mull over which taxes will be increased and by how much to cover any shortfalls.
The coalition formally approved Prime Minister Fumio Kishida’s move to raise defense spending to about 43 trillion yen over the next five years.
Meanwhile, the new defense fund will include non-tax revenues, money that went unspent by independent administrative agencies, and gains from the sale of government assets, such as Otemachi Place in Tokyo, a twin tower business complex standing on land where government offices were once located.
(This article was written by Taro Ono, Kuniaki Nishio and Keishi Nishimura.)
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