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HOME  > Past issues  > 2007 December 19 - 2008 January 8  > Fukuda Cabinet adopts FY 2008 draft budget
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2007 December 19 - 2008 January 8 [POLITICS]

Fukuda Cabinet adopts FY 2008 draft budget

December 21 & 25, 2007
The Fukuda Cabinet on December 24 adopted the FY 2008 draft budget with the general account totaling 83.1 trillion yen, up 0.2 percent from the initial FY 2007 budget.

Finance Minister Nukaga Fukushiro described the draft budget as “intermediary to a drastic tax reform” meaning that it will lead to consumption tax hikes.

The Liberal Democratic-Komei parties’ government is slashing 220 billion yen in welfare services by cutting government-designated drug prices and compressing the state burden for the government-managed health insurance in order to reduce the 750 billion yen of projected increase in welfare services needed due to the aging population

While substantially reducing expenditures for public works projects supporting peoples’ livelihoods, the government maintains major public construction works. The overall outlay for public works projects will decrease by 3.1 percent from the previous year. However, expenditures for the construction of belt highways in the Tokyo, Nagoya, and Osaka regions will rise by 1.8 percent and the construction of super hub ports will jump by 14.7 percent. In contrast, expenditures for housing and sewerage projects will decrease.

The scandal-ridden military expenditures will remain almost intact (4.7 trillion yen, down 0.5 percent) despite the government claim of reviewing of defense budget. This includes 65 billion yen to procure the next generation of antisubmarine patrol aircraft which can be deployed overseas and 171 billion yen for the Missile-Defense system which constitutes a pillar of the U.S. Bush administration’s preemptive strike policy.

The government also allocated 52 billion yen for the realignment of U.S. forces in Japan that includes the relocation costs of the U.S. Marine Corps from Okinawa to Guam and of the Ground Self-Defense Force Central Readiness Group headquarters to U.S. Army Camp Zama. The government has decided to pay 208 billion yen, down only nine billion yen, as “sympathy budget” to support the stationing of U.S. forces in Japan.

On the other hand, the government proposed to further reduce the tax burden on large corporations by expanding tax breaks for research and development as well as reviewing the depreciation system. It also plans to maintain securities tax breaks benefiting the wealthy. These measures have hollowed out tax revenues, aggravating the fiscal crisis.

The amount of Japan’s government (central and local combined) long-term debt outstanding will balloon to 776 trillion yen at the end of FY 2007.
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