There's no money left, Japanese government enterprises | Countermeasures | Japanese government

A recent poll showed that the support rate for the cabinet of Japanese Prime Minister Fumio Kishida has dropped to 28%. Since the beginning of this year, Kishida has announced a significant increase in defense budget and introduced a new policy to encourage childbirth. Multiple media outlets and opposition parties believe that in order to achieve these policy goals, the Kishida government may choose to raise taxes. In the context of low approval rates, experts point out that it is difficult to avoid tax increases and welfare cuts, which are also governance difficulties that Kishida cannot avoid.

1

Low support rate, Kishida urgently "extinguishing the fire"

Japan's prices continue to rise, and real wage income has been decreasing year-on-year for 14 consecutive months. The public's dissatisfaction with the Kishida government has become increasingly strong. On July 25th, Japanese media reported that multiple latest poll results showed a sharp drop in the approval rating of the Kishida Cabinet, hovering around 30%.

According to a poll by the Daily News, the support rate for the Kishida Cabinet has dropped to a dangerous 28% level. If it falls below 20%, there is a risk of stepping down.

At the end of June, a report submitted to the cabinet by the Japanese government's tax system investigation agency caused another wave of public opinion in Japan. Media reports suggest that the report suggests the government reduce various tax exemptions for salaried workers, including severance pay, family support deductions, and even transportation subsidies. According to calculations, a Japanese father who needs to support a family of four and earns an annual income of 6 million yen may lose an annual income of 470000 yen due to policy adjustments, which is equivalent to one month's salary.

On July 25th, Kishida urgently called on the chairman of the Liberal Democratic Party's tax investigation committee, Yoichi Miyazawa, to "put out the fire" and stated that he did not intend to raise taxes on the working class. Yoichi Miyazawa told reporters that the report of the tax system investigation committee does not involve any content of raising taxes on the working class, and the tax system investigation committee is not a decision-making body.

Although Kishida has repeatedly denied raising taxes, experts point out that for the financially strapped Japanese government, future tax increases and welfare cuts will be unavoidable topics that Kishida cannot avoid.

2

Opposition to the sharp increase in defense costs and taxes

The Kishida government confirmed at the end of last year that the defense budget for the fiscal year 2023 would increase from 5.4 trillion yen to 6.8 trillion yen, and the total defense budget for the fiscal years 2023 to 2027 would increase to approximately 43 trillion yen.

On February 28, 2023, in Tokyo, Japan, Japanese people held up signs to protest against the high defense budget passed by the Japanese House of Representatives. Photo by Xinhua News Agency reporter Guo Dan

In February of this year, the Kishida Cabinet launched the Defense Finance Guarantee Act to ensure the source of defense funds and quickly push it into the parliamentary review process. In order to get by, the plan proposes four measures: firstly, to increase non tax income by selling state-owned property and establishing a "Defense Enhancement Fund"; The second is to use the year-end settlement surplus to support defense; The third is to strengthen expenditure reform, reduce social security expenses, etc. to reduce unnecessary expenses; The last item is a tax increase. The plan vaguely states that tax increases are only considered when none of the first three methods can solve the financial problem.

Multiple media reports have pointed out that the above-mentioned bill is full of flaws, and experts openly question the basis for raising defense costs to 43 trillion yuan. The opposition parties, including the Constitutional Democratic Party, the Japan Reform Association, the National Democratic Party, and the Communist Party of Japan, strongly oppose the bill, believing that it attempts to downplay and blur the content of tax increases. However, the final tax increase is inevitable and will increase the burden on the people.

Although opposition parties strongly opposed it, relying on the ruling party's majority in both houses of the House and Senate, the Defense Finance Guarantee Act was ultimately passed in Congress after two delays.

3

Where does money come from to cope with the shortage of children?

To cope with the trend of fewer children and encourage childbirth, Kishida plans to expand various subsidies starting from the 2024 fiscal year with an annual budget of around 3.5 trillion yen.

Considering that the source of defense funds has been strongly opposed due to tax increases, and the Japanese government has failed to increase taxes for many times before, Kishida has repeatedly stated that the policy of reducing children does not consider tax increases. Possible ways to raise funds include: raising the social security burden standard of individuals and enterprises, reducing social security expenditures, raising the current "employer contribution" standard of enterprises for child allowances and nursery operations, and issuing additional treasury bond for the special policy of reducing children.

On May 27, 2015, children attended classes in the classroom at Fuji Kindergarten in Tachikawa, Tokyo, Japan. Photo by Xinhua News Agency reporter Liu Tian

Due to the inevitable increase in the burden on enterprises and individuals caused by various fundraising schemes, they were widely opposed during the brewing stage. The President of the Japan Federation of Economic Organizations, Yasuhiro Shikura, has repeatedly publicly opposed it and even petitioned the Finance Minister, questioning the rationality of the government's fundraising plan. On June 1st, considering the thorny issue of funding needed to deal with the policy of reducing birth rates and the possibility of sparking more public discontent, Kishida decided to temporarily put it on hold until the end of the year for further discussion.

In the fiscal year 2022, the national burden rate in Japan has increased from 24.3% in 1970 to 47.5%. In other words, nearly half of the national income has been deducted for public burden. In order to solve the problem of fewer children, it may be necessary to pay more social insurance premiums in the future. There are many complaints on social networks, believing that the government is "robbing Peter to pay Paul and squeezing the wallets of the people.".

The Asahi Shimbun in Japan reported that policies to encourage childbirth require trillions of yen. If consumption tax is not increased and funds are raised by reducing social security expenditures, it may harm the rights and interests of elderly people in Japan.

Minister of Health, Labour and Welfare Kato Katsunobu said on Fuji Television's program that "to be honest, there is no such surplus at the moment when I have to use the money for retirement and medical care to reduce the cost of childbirth.".

When discussing whether the policy of reducing children will eventually come to an end due to lack of money, political commentator Ito Dunfu said, "Shout out a slogan first, raise the banner high, and let's talk about the rest slowly." "Kishida has done this many times.".