TOKYO Dec 12 Japanese Prime Minister Shinzo
Abe's cabinet approved on Thursday a $53 billion extra budget
for the current fiscal year to fund stimulus steps announced
last week aimed at offsetting the blow from a planned increase
in the national sales tax.
The size of the supplementary budget comes to 5.46 trillion
yen ($53.3 billion), following a 13.1 trillion yen extra budget
compiled in January to stimulate the economy, according to the
Ministry of Finance.
The latest budget will bring government spending for fiscal
2013/14, which ends in March, to about 98.1 trillion yen.
That compares with 100.5 trillion yen earmarked the year
before, suggesting that Japan's spending remains expansionary.
It underlines the need for Abe to strike a balance between
boosting near-term growth and reining in a huge public debt.
The focus will now shift to a draft annual budget for the
next fiscal year from April, to be compiled later this month.
Abe's government could face stiff resistance against
spending cuts, with budget requests from ministries totalling a
record 99.3 trillion yen for fiscal 2014/15.
The government does not need to issue additional new bonds
to fund the latest extra budget, as it scrapes together revenue
such as bigger-than-expected tax receipts in the current year.
Last week the cabinet approved an 18.6 trillion yen stimulus
package, including 5.5 trillion yen in government spending, to
bolster the economy ahead of the sales tax hike in April.
Tokyo plans to raise the sales tax in April to 8 percent
from the current 5 percent, and to 10 percent in October 2015,
to pay for ballooning social security costs in a fast-ageing
To ease the pain of the tax hike for low-income households,
Japan's ruling coalition agreed on Thursday to introduce a lower
sales tax on daily necessities when the tax is at 10 percent.
The ruling bloc, in their annual tax code revision for
fiscal 2014/15, also agreed to raise the light vehicle tax by 50
percent to 10,800 yen a year from April 2015, while cutting the
car acquisition tax in April 2014 when the sales tax is raised.
The stimulus package includes steps to boost industrial
competitiveness, support households, accelerate rebuilding from
the March 2011 earthquake and tsunami, and build infrastructure
for the 2020 Tokyo Olympics.