“I feel like I’ve come to the end”
A senior government official in Kasumigaseki muttered with a sigh.
It refers to the initial budget proposal for fiscal 2023, which the government decided on December 23, 2022.
Japan’s national debt expansion has stepped up to a new level by embarking on a significant increase in future defense spending.
35.623 trillion yen issuance of government bonds in FY2011
The total amount of the general account in FY2023 is 114.3812 trillion yen. 6,784.8 billion yen has increased from the initial budget for FY2010, reaching a record high for the 11th consecutive year.
On the other hand, tax revenue, which is the pillar of revenue, is 69,044.1 billion yen. As a result of expecting an increase in income such as corporate tax revenue, the initial budget will be the largest, but only about 60% of the total expenditure will be covered.
For this reason, in FY2011 as well, 35.623 trillion yen of government bonds, equivalent to the national debt, will be issued at the initial stage. It is likely that the severe fiscal situation, which is dependent on government bonds, will be accelerated.
The reason why the ministry executives mentioned at the beginning lament is that the factors behind the expansion of the initial budget for fiscal 2011 are decisively different from the conventional initial budget.
The traditional factor pushing up the initial budget was the increase in social security costs, which accounted for one-third of the expenditure. A natural increase due to the declining birthrate and aging population is inevitable, and this has continued to put pressure on public finances.
However, in fiscal 2023, this will be accompanied by an increase in defense spending.
The Fumio Kishida administration, which aims to strengthen its defense capabilities, has set a policy of raising the total defense and related expenditures to 2% of gross domestic product (GDP) in fiscal 2027. The government plans to allocate 43 trillion yen to defense spending over the next five years, requiring a total of 17 trillion yen more than before.
In fiscal 2023, the first year of the plan, the defense budget totaled 6,821.9 billion yen, the largest ever. This is an increase of 1,421.4 billion yen compared to the initial amount for FY2010, and the GDP ratio is calculated to expand from 0.96% in FY2010 to 1.19%.
Furthermore, in order to respond to the increase in defense spending, the government has established a “defense enhancement fund” that can be used for multiple years. In fiscal 2011, 3.3806 trillion yen was recorded after excluding fiscal 2023 defense spending from surplus funds in special accounts and the sale of national properties.
Turning away from painful topics such as spending cuts… Political irresponsibility
The biggest problem, however, is that the sources of funding for the increase in defense spending are still unclear.
While the government and ruling parties have discussed the tax reform at the end of 2022, they have indicated in the 2023 Tax Reform Outline that they will raise the corporate tax, income tax, and tobacco tax to finance the increase in defense spending. rice field.
It is said that the path toward a tax increase will be materialized in discussions on tax reform from fiscal 2011 onwards, but a tax increase that is unpopular with the public is strongly opposed by the Liberal Democratic Party and others, and it will not be straightforward.
The sale of state-owned property, which was used to finance the newly established defense force, is nothing more than a temporary source of income and cannot be considered a stable source of revenue. It only decided for the five years until 2015, and the prospects beyond that are not in place.
“If there is a shortage of financial resources to increase defense spending, we will have no choice but to issue government bonds.
Government officials have pointed out that even the initial budget for fiscal 2011 was merely a raking in of financial resources that should have been allocated to other projects and managed to put things in order. The Kishida administration made a decision to increase the defense budget without securing financial resources.
“In addition to social security spending, the increase in defense spending has certainly entered a new stage in the expansion of expenditures.”
This is what the Ministry of Finance has to say.
The unstoppable expansion of the initial budget can be said to be a symbol of the irresponsible nature of politics, which focuses on policies that are popular with the public and turns away from painful topics such as spending cuts. (Journalist Toshiro Shirai)