TOKYO Japanese Prime Minister Fumio Kishida said on Thursday that his government wouldn't raise taxes next fiscal year, but instead would take steps in stages towards fiscal 2027 to boost the deference budget.
As Japan prepares for next fiscal year's budget, defence budget is in focus as Kishida announces plans to reduce defence spending to 2 per cent of gross domestic product within five years, from 1 per cent now.
That would take Japan's defence spending to more than 11 trillion yen $80 billion, from the current 5.4 trillion yen, giving the country the third largest military budget based on current levels after the United States and China.
The boost in defence spending stems from an increasingly assertive China and unpredictable North Korea, as well as growing geopolitical risks due to the Ukraine crisis and the tension in the Taiwan Strait.
Obtaining funding sources is under scrutiny as to how many unpopular tax hikes would be needed and how much debt needs to be issued, and more importantly, whether Japan could secure sustainable funding sources over time.
According to some media opinion polls, the defence spending plan was unpopular among the public as many people want the government to prioritize support to help them cope with the rising costs of living, not boosting military outlay.
Boosting military spending could strain Japan's public debt, which is already worth more than twice the size of its economy, the biggest multiple in the industrialised world.
A senior ruling party official said on Wednesday Japan won't rule out any measures to fund defence spending, but the government wouldn't raise taxes in the next fiscal year when the five-year defence spending plan kicks off.