"Japan Doubles Defense Budget, Burden on Entire Population... Must Develop Counterattack Capability"

Defense Capability Enhancement Expert Meeting, Report
Japan Ruling Party and Government Begin Serious Discussions on Defense Budget Increase
Avoidance of National Bond Issuance and Income Tax Hike Mentioned
66% Public Oppose Funding Through Tax Increase

Japanese Prime Minister Fumio Kishida. [Image source=Yonhap News]

[Asia Economy Reporter Lee Ji-eun] The Japanese government has reportedly begun considering tax increases to nearly double defense spending within five years, according to the Nihon Keizai Shimbun on the 22nd. However, corporate tax hikes have been excluded from the discussion, which is expected to trigger backlash from public opinion and political circles. Experts have also suggested that Japan should acquire "counterattack capabilities (the ability to strike enemy bases)" to strengthen its defense power.

Japanese Prime Minister Fumio Kishida received a completed report based on remarks from an expert meeting on defense spending at the Prime Minister's Office, delivered by the meeting chair, Kenichiro Sasae. Earlier, on the 10th, Prime Minister Kishida held an expert meeting to discuss the 2023 budget formulation and tax system revisions to secure funding for defense spending.

According to Nihon Keizai, the report reportedly includes recommendations to avoid issuing government bonds for the defense budget increase and to implement tax hikes across a broad range of areas. The specific tax items to be raised were not specified, but Bloomberg reported that during the expert meeting on the 10th, raising personal income tax was mentioned due to concerns about the burden on citizens.

Regarding the scale of the defense budget increase, the goal was presented to raise defense spending from the current level of about 1% of Gross Domestic Product (GDP) to 2%, matching the level of the North Atlantic Treaty Organization (NATO), within five years. Japan's defense budget for this year is 5.4 trillion yen (approximately 51.65 trillion won), and increasing it to 2% would require more than 5 trillion yen in new annual funding.

After receiving the report, Prime Minister Kishida and the ruling party-government coalition began discussions on increasing defense spending based on the contents raised in the meeting. Toshimitsu Motegi, secretary-general of the ruling Liberal Democratic Party (LDP), held a press conference that day and expressed intentions to intensify discussions on tax increases. He stated, "We plan to review funding through budget expenditure adjustments," but emphasized, "It is necessary to deepen consideration of how the entire public will bear the burden for the shortfall."

The issue is that corporate tax hikes were not discussed in this round of talks. Previously, within Japan, options such as issuing deficit-covering government bonds or raising corporate taxes had been considered to fund defense spending. Some proposals also suggested increasing taxes on wealthy individuals earning over 100 million yen annually.

However, the report reportedly did not include any content related to corporate tax increases. Nihon Keizai stated, "The report mentioned that efforts by companies should not be undermined in relation to tax increases."

As a result, political and public opposition to tax hikes is expected to intensify. Especially regarding the consumption tax, which directly affects citizens' daily lives, the ruling LDP appears to be mindful of public opinion. Yoichi Miyazawa, chair of the LDP's tax research council, expressed agreement on the necessity of tax increases but said, "Since the consumption tax is used for social security funding, I do not want to increase it to cover defense spending."

Public opinion in Japan also shows a negative stance toward tax increases. A poll conducted by Fuji News Network (FNN) revealed that 66% of the public opposed raising income or corporate taxes to fund defense spending.

Makoto Nishida, chair of the tax research council of the Komeito Party, the LDP's coalition partner, also pointed out, "Discussions should proceed in the order of budget expenditure reform, government bond issuance, and then tax increases. If funding is necessary, all tax items generating over 1 trillion yen in revenue should be reviewed before discussing tax hikes."

In the report, experts also emphasized that "possessing counterattack capabilities to strike enemy missile launch sites is indispensable" to strengthen deterrence. They demanded securing a sufficient number of long-range artillery missiles within five years. NHK explained that this is aimed at North Korea, which has been launching ballistic missiles daily. The Japanese government is reportedly considering developing domestically produced stand-off missiles or purchasing foreign-made missiles.

This content was produced with the assistance of AI translation services.