Finance Ministry budget plan does nothing to ease public anxieties

Japan Press Weekly

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Finance Ministry budget plan does nothing to ease public anxieties

The Finance Ministry on December 20 presented its FY 2009 budget plan, the first under the Aso Cabinet, to other ministries at an extraordinary cabinet meeting.

The cabinet meeting also approved the FY 2008 second supplementary budget plan.

An “employment security package” is said to be the centerpiece of measures to boost the economy, but the plan only focuses on “follow-up steps” to deal with the worsening employment situation and has no intention to discourage large corporations from competing with each other to “terminate fixed-term contracts and temporary workers”.

Following the announcement of the FY 2009 budget plan compiled by the Finance Ministry, Japanese Communist Party Secretariat Head Ichida Tadayoshi issued a statement on the same day.

Amid the serious economic crisis, workers who lost their jobs and even a place to live as well as small- and mid-sized business owners who are affected by declines in orders and the credit crunch, are raising their objections. However, the Finance Ministry’s FY 2009 budget plan and the second supplementary budget, both announced today, reveals the coldhearted position of the government as it gives specific steps to help large corporations, mega banks, and large asset holders as usual while announcing the intention to increase the consumption tax. The budget plan does not contain any effective steps to ease people’s agony and anxiety.

The government is unwilling to discourage large corporations from dismissing fixed-term or temporary workers and admonish mega banks for being reluctant to finance SMEs. In addition, the budget plan is entirely inadequate in dealing with worsening labor and small business situations, and lacks any sense of urgency. It only outlines some stopgap measures by using the government’s “buried reserve funds” for social security spending, but adheres to cutbacks in the growth of expenditure by 220 billion yen a year. It also intends to maintain the healthcare insurance system for people aged 75 and older, and shows no sign of remorse over the structural reform policy that has destroyed livelihoods. Leaving an extra-burden of 13 trillion yen a year on the people untouched will not turn the economy around no matter if the government distributes cash handouts to the public with a general election in mind.

The FY 2009 budget plan offers extraordinary deals that benefit large corporations, mega banks, and large asset holders by exempting dividends of overseas subsidiaries from taxation, extending preferential securities tax breaks for three more years, and preparing another 30 trillion yen in public funds to inject capital into banks and buy out bank equity. Furthermore, the government is tripling the budget (from the previous fiscal year) for the U.S. military realignment plan, which has now shifted into high gear. The budget plan takes a clearer stance putting “priority on large corporations” in “subservience to the demand by the United States”.

In addition to issuing an enormous amount of government bonds, the FY 2009 budget plan relies on the “buried reserve funds” for state contributions (2.5 trillion yen) in the basic pension despite the need to permanently secure financial resources for that program. It is an irresponsible budget compilation that virtually pulls the teeth from the government commitment to turn earmarked revenues for road construction into general-purpose funds. It is ultimately aimed at imposing an increase in the consumption tax on the public. The government wants to stipulate in its “interim program” that it needs to enact a law to raise the consumption tax rate in the FY 2010 to take effect in the FY 2011. It is absolutely impermissible to embark on such a tax hike plan.

The need now for the budget compilation is, as presented by the JCP “proposal for emergency economic measures”, to prevent the burden of the failure of “casino capitalism” from being shifted onto workers, SMEs, and the general public; support people’s livelihoods; and increase domestic demand instead of depending on foreign demand in order to restructure the Japanese economy. The JCP will make the utmost effort to achieve this end. - Akahata, December 21, 2008