TOKYO (Reuters) – The head of tax policy for Japan’s ruling Liberal Democratic Party said on Friday that raising corporate taxes was an option to fund the country’s defense strengthening, the newspaper said.
“A fairly large tax should be considered if there is an expectation of significant tax revenue,” Yuichi Miyazawa, head of the LDP’s tax commission, told Nikkei in an interview.
The Nikkei also quoted Miyazawa as saying that the idea of issuing more government bonds to fund defense spending was “totally irresponsible”, and reduced the potential for increasing the country’s massive debt burden.
Japan’s Defense Ministry has requested a 3.6% increase in spending to 5.6 trillion yen ($37.98 billion) for the next fiscal year starting in April, as Prime Minister Fumio Kishida’s government seeks to build military capabilities.
This is equivalent to about 1% of Japan’s GDP of 544 trillion yen. Japan’s public debt burden is the heaviest in the industrialized world at more than twice the size of its GDP.
Kishida’s Liberal Democratic Party has pledged to double defense spending to 2% of GDP over five years, raising it by about 5 trillion yen.
Jiji News Agency reported last month that besides the corporate tax, the government and the ruling coalition are considering increasing fiscal income and tobacco taxes.
Makoto Nishida, Miyazawa’s counterpart to the LDP’s junior partner Komeito, also suggested the possibility of raising taxes, rather than issuing debt, to fund defense strengthening in an interview with Reuters in late September.
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