Japan’s lower house on Friday approved a 13.20 trillion yen ($88 billion) supplementary budget for the current business year to next March to implement additional inflation relief measures intended to support struggling households.
The budget plan, which includes the issuance of 8.88 trillion yen worth of government bonds to secure the necessary funding, goes to the upper house for deliberations, with the government seeking to have it enacted by the end of November.
During deliberations in the House of Representatives, opposition parties raised concerns about Prime Minister Fumio Kishida’s pledge to “return” some of the country’s increased tax revenues from recent years to the public at a time when Japan’s fiscal health remains the worst among developed nations.
Japanese Prime Minister Fumio Kishida (C) bows after a supplementary budget for the current business year to next March is approved by the House of Representatives Budget Committee on Nov. 24, 2023, in Tokyo. (Kyodo)
The new package includes 70,000 yen payouts to low-income households that are exempt from paying tax and an extension until next spring of subsidies to reduce fuel costs as most of the country’s recent inflation can be attributed to higher prices of imported energy and raw materials.
In addition to mitigating the impact of inflation, the government also seeks to boost the competitiveness and potential of the economy by supporting the domestic chip sector and investing in growth areas such as artificial intelligence.
One of the opposition parties, the Democratic Party for the People, took the relatively unusual step of backing the ruling parties’ draft budget plan after negotiating a discussion about possibly reintroducing a “trigger clause” that can reduce gasoline taxes under certain circumstances.
A freeze was introduced on the clause to increase tax revenues in aid of reconstruction in the wake of the 2011 earthquake and tsunami that caused the Fukushima-Daiichi nuclear accident.
The small opposition party also sided with the ruling camp and approved the fiscal 2022 budget plan when they were given a similar guarantee, but its attempts to have the freeze on the trigger clause removed were unsuccessful.