January 30, 2013

Akahata editorial (excerpts)

The government on January 29 presented an initial budget draft for fiscal year 2013, the first proposed budget after Abe Shinzo made his comeback to power. The draft incorporates a 3% increase in the consumption tax rate slated for April 2014 in exchange for partial tax breaks. The draft also sets forth an increase in large public works projects and a package to buoy large corporations in the name of “economic revitalization” on the grounds that the present stagnant condition cannot clear the way for additional tax hikes. In contrast, the draft curtails assistance measures encompassing the daily lives of people. For the first time in eleven years (except for FY2010 when U.S. forces-related budget increased), the military budget will be increased. This kind of use of tax money will hardly obtain consent from the general public who are destined to shoulder a higher tax burden. There is now no doubt that the Abe government intends to adopt an approach completely contrary to people’s demands.

The 2013 initial budget draft is about 92 trillion yen in size, financed by tax revenues of about 43 trillion yen and about the same amount of state bonds, or debts, which the general public will have to pay for.

During the previous government led by the Democratic Party of Japan, the present ruling Liberal Democratic Party abetted the DPJ in the move to increase the consumption tax rate. In order to balance out the planned tax increase in consumption, the draft spells out tax cuts for purchasing of luxury homes and cars in addition to a modest increase in taxes for large corporations and large asset holders.

Pragmatically speaking, the Abe Cabinet fears the possible infeasibility of tax increases as scheduled because of the prolonged recession. This fear makes his government ardent about enhancing the “growth” of large corporations’ strength with the aid of generous monetary easing.

Like the easy-money policy, pork-barrel spending on large public works projects such as constructing expressways and large-scale trading ports will benefit only major general construction contractors. Tax incentives such as for R&D will enrich the coffer of business giants, not small- and medium-sized enterprises.

The draft hammers out drastic cuts in people-related services, including the livelihood protection program. People on welfare will receive reduced benefits for three consecutive years starting this coming April. The cutback on the amount will reach 67.1 billion yen in FY2013 alone. Of all welfare recipients, 96% will be subject to the planned reduction, and will feel the brunt of the attack by the coldhearted administration which wants to evade state responsibility for people’s living conditions using the principle of self-support and self-help as an excuse.

The draft, on the other hand, will increase the military budget by 40 billion yen. The Abe government decided to make changes in the National Defense Program Guidelines drown up by the former government and scrapped the Midterm Defense Program setting out the total amount of assumed military expenditures. The number of personnel in the Ground, Maritime, and Air Self-Defense Forces will increase as well, obviously another component in the military buildup.

Budgets funded by the people’s tax money should prioritize the improvement of livelihood-related programs. To make a breakthrough in the present ailing economy, it is important to focus on people’s living conditions. A rise in household income is an essential element to boost domestic demand. The Abe government has no intention to protect let alone enhance people’s lives.