2nd supplementary budget will only worsen economy

Japan Press Weekly

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2nd supplementary budget will only worsen economy

Akahata editorial (excerpts)

The Diet discussion on the second supplementary budget featuring cash handouts is still underway.

The government of the Liberal Democratic and Komei parties is planning to increase the consumption tax in disregard of the hardships many people are experiencing as they have been forced to annually pay an extra 13 trillion yen in cutbacks in benefits and increases in fees for social services since the Koizumi Cabinet was in office.

Prime Minister Aso Taro has reiterated his view that the cash handouts "are effective to some extent under the present harsh economic circumstances."

He seems to be unaware of the fact that the LDP-Komei government that has promoted the so-called "structural reform" policies as dictated by business circles is the very source of the present severe economic conditions. If he is aware of that, he could not tout the one-time cash handouts as an "effective" stimulus while continuing to force the public to pay an additional 13 trillion yen a year.

Regarding its plan to increase the consumption tax, the government stresses the need to fulfill its fiscal "responsibility". However, it is the LDP and its successive governments that are to blame for the growing long-term national and local debts. Large-scale public works projects and excessively generous tax breaks for big business and the wealthy have produced a huge amount of fiscal deficit. In addition, since the consumption tax rate was raised to five percent in 1997 from three percent, the country's tax revenue has been in decline.

Showing no sense of responsibility for the fiscal crisis, the LDP-Komei government is pretending to be willing to fulfill the responsibility in order to force the public to pay more by once again raising the consumption tax rate.

The second supplementary budget also includes a generous package in favor of large banks and corporations such as injection of public funds into large banks, stock purchases from them, and purchases of promissory notes from large corporations. Furthermore, in its proposal for the next fiscal year's budget, the government includes the plan to increase the consumption tax in addition to an intention to give more tax breaks to large corporations.

In order to rebuild the Japanese economy to place priority on domestic demands instead of foreign demands, it is necessary to drastically change the present economic policy dubbed as the Koizumi-style structural "reform" policy that primarily benefits large corporations and banks, and hurts the household economy.

- Akahata, January 27, 2009