Japan to Renovate Self-Defense Forces Facilities with Government Bonds... "15 Trillion Won Scale by 2027"

'Construction Bonds' Unusual Usage Conversion Under Review
Calls Within the Liberal Democratic Party to Issue Bonds Instead of Tax Increases Emerge

Japanese Self-Defense Force fighter jet flying over Mount Fuji. Photo by AFP·Yonhap News

[Asia Economy Reporter Bang Je-il] The Japanese government is reportedly considering using government bonds to maintain Self-Defense Forces (SDF) facilities in order to secure defense budget resources that are expected to increase significantly in the future.

According to a report by the Yomiuri Shimbun on the 13th, at a working-level meeting between the ruling Liberal Democratic Party (LDP) and its coalition partner Komeito, which reached an agreement on revising the three major security documents the previous day, the government announced its policy to use part of the construction bonds, which are used for building roads and bridges, for maintaining SDF facilities.

The scale of construction bonds to be allocated for SDF facility maintenance is expected to reach 1.6 trillion yen (approximately 15 trillion won) by fiscal year 2027. Until now, the Japanese government has maintained the position that "defense spending is largely consumptive in nature and therefore not suitable for bond issuance." In particular, construction bonds have been used for facilities that may affect future generations and have not been used for defense expenses.

The Yomiuri reported that regarding the government's push to repurpose construction bonds, "there have been cases where they were used for vessels of the Japan Coast Guard," and "voices within the LDP are emerging that construction bonds should be allocated to strengthen SDF facilities."

The Japanese government plans to raise defense spending, currently at about 1% of GDP, to 2% by 2027 in response to the military build-up of North Korea and China, aiming to possess capabilities including "counterattack capabilities" to strike enemy bases.

Japanese Prime Minister Fumio Kishida has stated that the increased defense budget will be funded through expenditure restructuring, budget surpluses, defense enhancement funds, and tax increases, and that bond issuance is not being considered.

The Japanese government and the LDP are considering gradually raising certain taxes starting in fiscal year 2024, aiming to secure 700 to 800 billion yen from corporate taxes and 200 billion yen each from tobacco tax and the special reconstruction income tax by 2027.

However, within the LDP, there are increasing counterarguments that bond issuance should be considered as an option instead of tax increases that would burden citizens and businesses.

If the two parties approve the agreement within their ranks, the Japanese government plans to decide on the revision of the three major security documents at the Cabinet meeting on the 16th.

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