Japan will not rule out tax on income and corporate increases to help fund military spending , says a lawmaker.
Tokyo (Reuters) Japan hasn’t completely thought of raising corporate or household income taxes to finance an anticipated increase in its defense budget in the upcoming financial year’s fiscal, chairman of the Liberal Democratic Party’s (LDP) tax policy committee announced on Monday.
However, Yoichi Miyazawa also said to journalists that he didn’t have any specific ideas in mind for tax increase.
The Japanese defence ministry has requested for an 3.6 percent increase in the amount of spending, in the range of 5.6 trillion yen ($37.98 billion) for the upcoming fiscal year, which will start in April. This comes as the prime minister Fumio Kishida’s administration seeks to boost military capabilities.
This is equivalent to about one percent of Japan’s total Gross Domestic Product (GDP) in 544 trillion yen. Japan’s debt load is among the highest in the world’s industrialized economies at nearly twice the amount of the country’s GDP.
Kishida’s LDP has committed to doubling defense spending to 2percent of GDP in the next five years. This could mean increasing it by around five trillion dollars.
Miyazawa has ruled out an increase in the sales tax – equivalent to the value added tax that is imposed in other advanced nations – in order to fund the increase in defense spending as tax revenue is intended to finance social security outlays.
Makoto Nishida who is Miyazawa’s deputy in the LDP’s senior coalition partner Komeito and Komeito, also discussed that the idea of raising taxes instead of the issue of debt to fund the building of defence in an Reuters interview in the latter part of September.
