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2013年1月31日 (木)

13年度予算案 デフレ脱却へ問われる積極策

The Yomiuri Shimbun (Jan. 31, 2013)
Govt must impose fiscal discipline even while seeking economic growth
13年度予算案 デフレ脱却へ問われる積極策(1月30日付・読売社説)


The fiscal 2013 budget is aimed at propping up the economy with an expansionary fiscal policy. The ability of the administration of Prime Minister Shinzo Abe to revitalize the economy and overcome deflation--its top priority--is now being tested.

The Cabinet approved the fiscal 2013 budget Tuesday. General-account spending totals 92.6 trillion yen, marking the first decline in seven years.

Tax revenue is expected to surpass new government bond issuance for the first time in four years. Another point of the fiscal 2013 budget is that policy-related spending by ministries and agencies was limited to 70.4 trillion yen.

Deputy Prime Minister and Finance Minister Taro Aso said at a press conference: "We compiled the budget with the fiscal policy framework in mind. It's a tight budget."


Tax hike depends on recovery

However, the budget is actually the largest ever if a separate reconstruction budget, which was increased significantly to 4.4 trillion yen, is included.

The Abe administration calls the fiscal 2012 supplementary budget and fiscal 2013 budget "a 15-month budget" and aims to ensure seamless fiscal stimulus.

The administration wants to achieve a clear economic recovery before making a final judgment in autumn over whether to raise the consumption tax rate in April next year. It cannot be helped that the government tries to create an environment for the consumption tax hike by compiling a blockbuster budget.

However, 46.3 percent of the fiscal 2013 budget will be financed by new government bond issuance, meaning almost a half of the nation's revenue comes from creating new debt. Outstanding long-term debts owed by the central and local governments will reach 977 trillion yen at the end of the next fiscal year. As this is double the nation's gross domestic product, Japan is a major debt-ridden nation, to a more serious degree than even Greece, which is currently in a fiscal crisis.

We must take the nation's fiscal situation seriously, as it is the worst among developed countries.

Another problem is that the government juggled many methods to make the fiscal 2013 budget smaller than the initial fiscal 2012 budget, which was compiled by the Democratic Party of Japan-led administration.

Compressing expenditures was made possible largely by scrapping a reserve fund to deal with an economic crisis, which totaled nearly 1 trillion yen, and by advancing spending by ministries and agencies into the fiscal 2012 supplementary budget.

The government projected rather larger tax revenue based on its estimate that the nation's economy will grow 2.5 percent in real terms, which is far higher than private analysts' estimates, but it is uncertain whether the nation can achieve stable growth.

The government also treated bonds to cover state contributions to basic pension benefits separately. But isn't that just a cosmetic measure to make new bond issuance appear lower?

Also, trimming expenditures is not enough. The government earmarked 5.3 trillion yen for public works projects in fiscal 2013, about 700 billion yen more than in the previous fiscal year. Aging roads and bridges need to be repaired, but the government must not increase inefficient projects in the name of "strengthening national land."


Scrutiny vital for public works

Without relying only on public works projects as a temporary shot in the arm, it is essential for the government to bolster its growth strategy in an effort to enhance corporate competitiveness and put the economy on a track for growth.

The Liberal Democratic Party-led government increased spending for land improvement projects, which had been cut by the DPJ-led government. As for income support to farming households, the government earmarked the same level of funds as in the previous fiscal year, only changing the name that the DPJ-led administration had given the system.

This is nothing but a handout policy. It is doubtful whether such a fiscal support system will lead to reinforcing the nation's agriculture in preparation for further opening of the market.

Fiscal inflexibility became more clearly evident when we looked at other items of spending.

Social security spending swells to about 29 trillion yen due to natural increase and other factors, livelihood protection benefits have been cut by a small margin. It will be necessary to further curb fiscal spending on such programs as pension payments and medical expense benefits.

In the category of national security, the budget vividly reflects the intentions of Prime Minister Abe.


Defense budget rise laudable

Defense spending has been increased for the first time in 11 years. It is laudable that the government has clarified its resolve to protect Japan's territory and waters, including the Senkaku Islands in Okinawa Prefecture.

Attaching importance to the defense of the Nansei Islands, extending from Kagoshima Prefecture to Okinawa Prefecture, the government boosted budgets for strengthening patrol and reconnaissance activities and response capabilities for defense of remote islands. Budget allocations for this purpose are reasonable.


The government will formulate new National Defense Program Guidelines before the end of this year. It is vital to reform and upgrade the structure and capabilities of the Self-Defense Forces from a medium- and long-term perspective without limiting such efforts to the fiscal 2013 budget alone.

The budget related to the Japan Coast Guard has jumped for the first time in six years. The allocations for maintenance and upgrading of patrol boats and aircraft have been increased by 40 percent over fiscal 2012. Personnel will be augmented, too.

China's provocations in connection with the Senkaku Islands have been continuing. It is appropriate that the conventional "scrap-and-build" principle for JCG patrol boats has been abandoned to adopt a policy of increasing the number of such boats.

A crucial item on the policy agenda for the future will be to pave the way as early as possible for achieving fiscal reconstruction in the medium and long term. If fiscal discipline remains lax, it is feared that Japanese government bonds will lose their international credibility.

Trimming tax grants to local governments for the first time in six years for the purpose of cutting payments to local government employees, it may be said, is a step forward.

The Abe administration has inherited the DPJ-led administrations' policy target of getting the primary balance into the black in fiscal 2020. But the hurdles on the way to this goal are high.

It will be indispensable to streamline fiscal spending while trying to secure fiscal resources through tax system reforms centering on the implementation of consumption tax hikes. The government must meet the heavy challenge of achieving economic growth and fiscal discipline at the same time.

(From The Yomiuri Shimbun, Jan. 30, 2013)
(2013年1月30日02時01分  読売新聞)


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« 息苦しい日本の税制を逃れてみませんか オフショア投資です | トップページ | 中国大気汚染―改善は日中の利益だ »