December 25, 2010
Akahata editorial
The government has decided its proposed budget for the fiscal year 2011, amounting to an unprecedented level of 92.4 trillion yen in the general account.
The debt used to repay the interest on government bonds will be 21.5 trillion yen. The government budgets 71 trillion yen for expenditures, and does not account for these bond-related costs. It earmarks 2.1 trillion yen for projects under the “special budgetary framework to revitalize Japan”, far larger than the initial plan of one trillion yen.
With only 41 trillion yen in tax revenues, the government estimates the issuance of new deficit-covering national bonds of 44.3 trillion yen. Debts will exceed tax revenues for two consecutive years. Non-tax revenues, in contrast, will increase to 7 trillion yen.
No effect
While large exporters show a recovery in their profits, the general public is still experiencing hard times. The unemployment rate remains at 5%, leaving more than 3 million people without jobs. The number of those who have been unemployed for more than one year has reached 1.28 million. The prospect for an improvement in the employment situation is not yet in sight and decreases in the pay scale continue. Workers who earn less than two million yen a year now accounts for 25% of the total workforce, further increasing the gap between the rich and the poor.
Japan has been in bad fiscal shape since the 1990s because it increased its spending on large-scale public works projects and military-related affairs in response to U.S. and Japanese corporate demands. Military expenses are now at around a 5-trillion yen level. The government has also given generous tax breaks to large corporations and large asset holders.
The main task when compiling the next fiscal budget was supposedly to find ways to create sources to protect people’s living conditions by removing various causes of budget deficits. This was what the government itself was stating.
Despite this fact, the government dedicated itself to further cuts in corporate taxes. Prime Minister Kan Naoto decided to reduce the corporate tax by 5% from the current effective rate of 40% as requested by the business circles. The Ministry of Finance estimates that the resultant loss in tax revenues will amount to more than 2 trillion yen.
To make up for this loss, the ministry claims that it can create 800 billion yen by reviewing the carry-over system of losses to a next account year and by downsizing the R&D tax exemptions. If it can actually come up with the 800 billion yen, it should be used for the improvement in people’s living conditions.
According to Nikkei, cash reserves of listed companies increased by 6.9 trillion yen over the past year to more than 64 trillion yen. Internal reserves amassed in large corporations are now exceeding 240 trillion yen. Further tax cuts for these corporations will, therefore, have no effect on increasing domestic investments and job creation.
The government was initially thinking of returning the preferential securities tax rate to 20% from the present 10%. However, as was expected, it gave in to pressure from the finance industry and decided on a 2-year extension of the present rate. The government incorporates the cost for the stationing of the U.S. forces in Japan, the so-called sympathy budget, in the “special budgetary framework to revitalize Japan” so that it can maintain the amount budgeted in compliance with U.S. demand. The government is also maintaining the 5-trillion yen budgeted for military expenditures.
In sharp contrast to the generosity to large corporations, shareholders, and the U.S. forces, the government will cut the amount of pension benefits in accordance with falling prices on the grounds that it has few resources to stably maintain the state share of contributions to the pension program. It is also cutting the budget to establish small-sized classes and is turning its back on the call for the reinstitution of the additional benefits for the elderly in the livelihood protection program. It is even considering raising the public burden for the costs of medical and nursing-care services for the elderly.
Further depressing of household economy
Minister of Finance Noda Yoshihiko stated that the ministry is preparing to impose an increase in the consumption tax rate in the fiscal year 2012. The reason why the government finds difficulty in compiling the budget draft due to revenue shortages is because it keeps being overly generous to big business interests and the U.S. military while disregarding negative effects on the general public, not because of a supposed “need” to increase the consumption tax. It is completely unacceptable for the government to pass on the losses and the debts piled up as a result of sloppy handling of national finances to the general public by implementing a consumption tax hike.
The Japanese Communist Party consistently calls for a people-oriented budget and an end to the wasteful use of tax for military spending and the rich.
The government has decided its proposed budget for the fiscal year 2011, amounting to an unprecedented level of 92.4 trillion yen in the general account.
The debt used to repay the interest on government bonds will be 21.5 trillion yen. The government budgets 71 trillion yen for expenditures, and does not account for these bond-related costs. It earmarks 2.1 trillion yen for projects under the “special budgetary framework to revitalize Japan”, far larger than the initial plan of one trillion yen.
With only 41 trillion yen in tax revenues, the government estimates the issuance of new deficit-covering national bonds of 44.3 trillion yen. Debts will exceed tax revenues for two consecutive years. Non-tax revenues, in contrast, will increase to 7 trillion yen.
No effect
While large exporters show a recovery in their profits, the general public is still experiencing hard times. The unemployment rate remains at 5%, leaving more than 3 million people without jobs. The number of those who have been unemployed for more than one year has reached 1.28 million. The prospect for an improvement in the employment situation is not yet in sight and decreases in the pay scale continue. Workers who earn less than two million yen a year now accounts for 25% of the total workforce, further increasing the gap between the rich and the poor.
Japan has been in bad fiscal shape since the 1990s because it increased its spending on large-scale public works projects and military-related affairs in response to U.S. and Japanese corporate demands. Military expenses are now at around a 5-trillion yen level. The government has also given generous tax breaks to large corporations and large asset holders.
The main task when compiling the next fiscal budget was supposedly to find ways to create sources to protect people’s living conditions by removing various causes of budget deficits. This was what the government itself was stating.
Despite this fact, the government dedicated itself to further cuts in corporate taxes. Prime Minister Kan Naoto decided to reduce the corporate tax by 5% from the current effective rate of 40% as requested by the business circles. The Ministry of Finance estimates that the resultant loss in tax revenues will amount to more than 2 trillion yen.
To make up for this loss, the ministry claims that it can create 800 billion yen by reviewing the carry-over system of losses to a next account year and by downsizing the R&D tax exemptions. If it can actually come up with the 800 billion yen, it should be used for the improvement in people’s living conditions.
According to Nikkei, cash reserves of listed companies increased by 6.9 trillion yen over the past year to more than 64 trillion yen. Internal reserves amassed in large corporations are now exceeding 240 trillion yen. Further tax cuts for these corporations will, therefore, have no effect on increasing domestic investments and job creation.
The government was initially thinking of returning the preferential securities tax rate to 20% from the present 10%. However, as was expected, it gave in to pressure from the finance industry and decided on a 2-year extension of the present rate. The government incorporates the cost for the stationing of the U.S. forces in Japan, the so-called sympathy budget, in the “special budgetary framework to revitalize Japan” so that it can maintain the amount budgeted in compliance with U.S. demand. The government is also maintaining the 5-trillion yen budgeted for military expenditures.
In sharp contrast to the generosity to large corporations, shareholders, and the U.S. forces, the government will cut the amount of pension benefits in accordance with falling prices on the grounds that it has few resources to stably maintain the state share of contributions to the pension program. It is also cutting the budget to establish small-sized classes and is turning its back on the call for the reinstitution of the additional benefits for the elderly in the livelihood protection program. It is even considering raising the public burden for the costs of medical and nursing-care services for the elderly.
Further depressing of household economy
Minister of Finance Noda Yoshihiko stated that the ministry is preparing to impose an increase in the consumption tax rate in the fiscal year 2012. The reason why the government finds difficulty in compiling the budget draft due to revenue shortages is because it keeps being overly generous to big business interests and the U.S. military while disregarding negative effects on the general public, not because of a supposed “need” to increase the consumption tax. It is completely unacceptable for the government to pass on the losses and the debts piled up as a result of sloppy handling of national finances to the general public by implementing a consumption tax hike.
The Japanese Communist Party consistently calls for a people-oriented budget and an end to the wasteful use of tax for military spending and the rich.
