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Japan Enacts Record Y97.71 Tril Budget for FY2018
Source: https://japantoday.com
Source Date: Thursday, March 29, 2018
Focus: Citizen Engagement, Institution and HR Management
Country: Japan
Created: Mar 30, 2018

Japan's Diet enacted Wednesday a budget for fiscal 2018 totaling 97.71 trillion yen ($926 billion), a record-high amount for the sixth straight year to cope with the country's aging population and North Korea's nuclear and missile threats.

The budget for the new fiscal year starting Sunday features 32.97 trillion yen in social security spending and 5.19 trillion yen in defense outlays, both the largest on record. The House of Councillors approved the budget plan following its passage through the House of Representatives on Feb 28.

Upper house deliberations had been dominated by the Finance Ministry's doctoring of records on a state land sale at the center of a suspected cronyism scandal plaguing the administration of Prime Minister Shinzo Abe.

The rapid aging of the population has made it difficult for the debt-ridden nation to rein in social security expenditures that include pensions and medical costs even as Japan's fiscal health has been the worst among advanced economies.

Still, the government managed to maintain its goal of limiting year-on-year growth in social security spending to 500 billion yen following a review of medical and nursing care fees.

In the general account budget, the government earmarked a record 74.41 trillion yen for policy spending while debt-servicing costs stood at 23.30 trillion yen.

The budget has allocated funds to prepare day-care facilities for children and enhance missile defense capabilities in response to the North Korean nuclear and ballistic missile threat.

About a third of the total revenue will be secured by issuing government bonds worth 33.69 trillion yen as tax revenue for fiscal 2018 is estimated at 59.08 trillion yen.

Japan's dependence on government bonds will fall slightly to 34.5 percent in fiscal 2018 from 35.3 percent in fiscal 2017 on an initial budget basis.

Abe has effectively given up on the government's goal of attaining a primary budget surplus by fiscal 2020 as pledged earlier, citing the need to expand child-care support and free education to invest in human resources development.

Parliament also approved raising income taxes on workers earning over 8.5 million yen a year and hiking taxes on tobacco products.

As Abe is seeking to accelerate wage growth, companies raising pay by 3 percent or more and stepping up investment can qualify for a tax credit as part of tax reform.

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