Photo/Illutration The 7th Air Wing of Japan Air Self-Defense Force's F-2 fighters hold a joint military drill with the U.S. 35th Fighter Wing's F-16 fighters over Sea of Japan, in this handout picture taken by Japan Air Self-Defense Force and released by the Joint Staff Office of the Defense Ministry of Japan on April 13. (Joint Staff Office of the Defense Ministry of Japan via Reuters/ file photo)

The Japanese government is looking into putting off a tax increase to fund extra defense spending by a year to 2025, a ruling party source with direct knowledge of the matter told Reuters said on Monday.

The coalition government agreed in December to raise key taxes to increase the defense budget, but stiff opposition among lawmakers effectively delayed a decision on when to implement the unpopular move.

The tax plan, following through on Prime Minister Fumio Kishida's commitment to raise taxes to double defense spending to 2% of gross domestic product by 2027, had become bogged down in wrangling among lawmakers who objected to near-term tax increases that could hurt Japan's fragile economy.

Kishida's administration has said the tax hikes will kick in "at an appropriate time" in 2024 or thereafter.

The government's long-term policy framework, expected for release later this week, will include language that allows the tax hike to be delayed until 2025 or later, the source said, confirming an earlier report by local news agency.

The delay would highlight challenges for Kishida who juggles the conflicting priorities of restoring Japan's tattered public finances and addressing geopolitical risks from an assertive China and unpredictable North Korea.

Japan is struggling to secure funding sources for planned defense spending of 43 trillion yen ($309 billion) over the next five years, which could further complicate its aim of balancing the budget - excluding new bond sales and debt servicing - by fiscal year 2025.

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