politics

Lower house approves Y3.12 tril extra budget

16 Comments

The lower house of the Diet on Friday approved a 3.12 trillion yen extra budget for the current fiscal year to fund stimulus spending and help pull the economy out of recession.

The extra budget for the stimulus, unveiled last month, includes funding for steps such as helping Japan's lagging regions and households with subsidies and shopping vouchers and rebuilding after natural disasters.

The budget will move to the upper house on Monday and is expected to be easily passed into law.

The extra expenditure comes on top of the initial outlay of 95.9 trillion yen, bringing the total amount of this fiscal year's general-account budget spending to 99 trillion yen, highlighting Japan's struggle to fix dire public finances.

In a show of commitment to fiscal reform, the government will not resort to fresh borrowing, while cutting new bond issuance by 757.1 billion yen from the initially planned 41.3 trillion yen for the current fiscal year ending in March.

Tokyo will fund the package with unspent money from previous budgets and tax revenue that have exceeded budget forecasts. Corporate profits have been boosted by aggressive monetary and fiscal stimulus policies under Prime Minister Shinzo Abe, even as the broader economy has struggled.

Higher profits by companies helped tax income in the current fiscal year increase by 1.725 trillion yen from the initially estimated 50 trillion yen. That marks the highest level in 17 years, allowing Tokyo to cut new bond issuance from the initially planned amount for the first time in eight years.

Japan must strike a delicate balance between reviving an economy that tipped into recession after a sales tax hike last April and reining in snowballing public debt that is twice the size of its economy, by far the largest in the developed world.

The world's third-largest economy is expected to have returned to growth in the final quarter of last year after two straight quarters of contraction.

The government expects the stimulus to boost Japan's gross domestic product by 0.7%, while private-sector economists see a smaller impact.

© Japan Today/Thomson Reuters

©2019 GPlusMedia Inc.

16 Comments
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Would not have been needed if not for the consumption tax hike. Such a waste.

1 ( +3 / -2 )

Stupid is as Stupid does.

"Tokyo will fund the package with unspent money from previous budgets and tax revenue that have exceeded budget forecasts. "

No thought of reducing wasteful spending whatsoever. Shockingly predictable.

3 ( +5 / -2 )

Higher profits by companies helped tax income in the current fiscal year increase by 1.725 trillion yen from the initially estimated 50 trillion yen. That marks the highest level in 17 years, ............................

The world’s third-largest economy is expected to have returned to growth in the final quarter of last year after two straight quarters of contraction.

The detail here speaks volumes, seems things are coming together.

-3 ( +0 / -3 )

The detail here speaks volumes, seems things are coming together.

all we know is that corporate profits went up, mainly because of the drop in the yen. But, we also know that much of the increase in tax income came from the increase in the consumption tax, which actually impacted domestic demand. And someone says the economy is "expected to have returned to growth". But we also know those same folks did not foresee the recession, or there would not be the need for the JPY 3.12 trillion extra spending. Not sure exactly what about that makes you so confident.

-1 ( +4 / -5 )

"we also know that much of the increase in tax income came from the increase in the consumption tax,"

How do we know that? The story says the extra revenues were thanks to higher corporate profits, which in turn were thanks to the govt stimulus measures.

It also states the surplus revenue originates from "previous" periods, which we can assume was before the tax hike in April.

-1 ( +3 / -4 )

@Jerseyboy, you explained it well...keep on posting. The budget increase seems to far exceed additional tax revenues as far as I read.

-1 ( +2 / -3 )

Yeah, that's just what we need to feel "confident" that the economy's finally "turning the corner:" more government stimulus, more borrowing and spending. Happy days are back, right? Riiiight...

I can see the government's logic clearly on this one: "We've charged you an extra 3% for every single thing you can possibly purchase in this country...so here, have a 10,000 yen voucher, and don't spend it all in one place, you lucky spoiled citizens, you! Now, we're even! And it's YOUR turn to say the economy's getting better!"

Higher corporate profits = higher wages for workers? Nope. Not yet. As has constantly been the case in the past, higher corporate profits = more government spending on pork and stimulus projects. Rah-rah-rah? Wait, how has that strategy worked out so far during this "lost decade" we're supposedly in (which has lasted, oh, twenty-five years and counting??)

1 ( +3 / -2 )

Jerseyboy we know a lot more than profits went up, the article says tax income was up because of corporate profits, ( therefore tax revenue is up ) and it also says that economy has returned to growth, couple of points you seemed to over looked right there in the article,

Please also verify your claim that the increase in tax take is from the 3% tax hike.

98% of people in business ( if it is even a little bit on the right track ) knows things are getting better, especially if they are in manufacturing or export, two of japans corners stones.

0 ( +2 / -2 )

"steps such as helping Japan’s lagging regions and households with subsidies and shopping vouchers"

As much as I need some relief, I'll never see any of this. I could use a reduction in the consumption tax though.

0 ( +0 / -0 )

Please also verify your claim that the increase in tax take is from the 3% tax hike.

StormR -- LOL. If you've read anything about the Japanese economy over the pst few months, especially the recent aricles about the recent government budget, and how they were able to lower the level of borrowing, you'd know this as well. Not gonna waste my time doing your homework.

98% of people in business ( if it is even a little bit on the right track ) knows things are getting better, especially if they are in manufacturing or export, two of japans corners stones.

Really? Then how come CNBC reports the following?:

Sentiment among Japan's big manufacturers worsened in the fourth quarter, the Bank of Japan's Tankan survey showed on Monday, underscoring pessimism about the Japanese economy.

Would you at least do some homework before you post so folks like myself don't have to waste time responding to nonsense?

-5 ( +1 / -6 )

"LOL. If you've read anything about the Japanese economy over the pst few months, especially the recent aricles about the recent government budget "

This article isn't about the "government budget," but an additional budget. Anyway, this article doesn't say the tax hike provided the extra revenue, as you argue. It says the revenue came from previous periods, which would be before the April hike.

"Would you at least do some homework before you post so folks like myself don't have to waste time responding to nonsense?"

Your response is highly ironic. Someone didn't do their homework, and it wasn't StormR.

0 ( +2 / -2 )

It says the revenue came from previous periods, which would be before the April hike.

Jeff -- huh. Did you not read the entire statement, or just hope I didn't? In either case, here it is:

Tokyo will fund the package with unspent money from previous budgets and tax revenue that have exceeded budget forecasts.

Which, is exactly consistent with what I said:

But, we also know that much of the increase in tax income came from the increase in the consumption tax,

Your response is highly ironic. Someone didn't do their homework, and it wasn't StormR.

Really, Jeff? Point out a single statement I made that is not supported in fact, as opposed to your and StormR's wishful thinking. But I'll match my BS in Economics and MBA (from two well-known Ivy League schools) against either yours or StormR's knowledge of fiscal and monetary policy anyday.

-6 ( +1 / -7 )

Really, Jeff? Point out a single statement I made that is not supported in fact, as opposed to your and StormR's wishful thinking. But I'll match my BS in Economics and MBA (from two well-known Ivy League schools) against either yours or StormR's knowledge of fiscal and monetary policy anyday.

Both JeffLee and StormR is correct.

First of all, under the revised law in regards to consumption tax, it is used exclusively to fund the social security and service costs only under the general budget.

As the below link indicates (pg 21), the 1.725 trillion yen in extra tax revenue does not include consumption tax.

http://www.mof.go.jp/budget/budger_workflow/budget/fy2014/sy270126/sy270126h.pdf

1 ( +3 / -2 )

My wishful thinking ?

Listen jerseyboy, we know the economy appears to be improving when we consider news reports of recent times,

We know tourism is up to record levels bringing in record amounts of overseas funds. We know manufacturing is turning the corner going on recent news. We know that employment figures are improving ( even if just a little ). We know that the governments tax revenue is up because of companies improved profits and the sales tax increase. We know that some companies have increased salaries for some. We know that consumer spending is on the rise. We know the trade deficit has tilted in japans favour from previous months.

These are all things WE KNOW and that have been reported on right here in recent weeks, facts not wishful thinking.

0 ( +1 / -1 )

Another positive is the price of oil has collapsed, that should help. No thanks to the pathetic Japanese government for that though.

Tax revenues up is good, but problematic is that they are still close to 40 trillion yen a year short given the outrageous level of spending. If only there were twice as many companies in Japan (producing twice the tax revenues) things would be fine. Japan really needs another bubble to support this sort of government behaviour.

We know the trade deficit has tilted in japans favour from previous months.

Heh, still a deficit though. Take the current account instead. Let's hope that can remain in the black.

0 ( +0 / -0 )

The falling price of oil has had probably the greatest effect on Japan's economy the last 6 months.

-1 ( +0 / -1 )

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