Japan Press Weekly

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2011 November 16 - 22 [POLITICS]

Diet enacts 3rd supplementary budget, a heavy blow to economy

The Diet on November 21 enacted a third supplementary budget for FY 2011 with the support of all political parties, except the Japanese Communist Party.

At a House of Councilors Budget Committee meeting held before the enactment, JCP representative Tamura Tomoko stated, “The major reason for us to oppose the budget is that it aims to promote disaster reconstruction by increasing income taxes and residential taxes. These measures will further dampen domestic demand and, together with the yen’s appreciation, give a heavy blow to the Japanese economy.”

The supplementary budget imposes an additional 8.8 trillion yen tax increase on ordinary people. On the other hand, the budget reduces the effective corporate tax rate.

Tamura criticized, “Additional tax revenues from working people will only be used to fill the gap created by the corporate tax cuts.”

The JCP representative emphasized that without relying on a regressive tax increase on the general public, sufficient revenues could be obtained by cancelling the reduction in the corporate tax rate and capital gain tax breaks, abolishing subsidies to political parties, and terminating the so-called “sympathy budget” and other financial support for the U.S. military presence in Japan.

The third supplementary budget fails to provide additional funding for small and medium businesses, which face the “double loan” problem caused by the 3.11 disaster and are struggling to pay their debts back as the year-end repayment deadline is coming up. Furthermore, it only allocates a paltry 240 billion yen for radiation decontamination work.

Meanwhile, the budget increases subsidies for large corporations to build new facilities in Japan to 500 billion yen while it raises the amount of national bonds issued to support Tokyo Electric Power Co. from two trillion to five trillion yen. Issuing these bonds means that the cost of compensation the company pays to victims will be imposed on the public in the end.

All political parties except the JCP voted in favor of the budget in the Diet despite claiming they are not satisfied with it.