A tax hike can be an option for Japan to secure funding to achieve an envisaged substantial increase in defense spending if cutting low-priority expenses does not suffice, the head of a ruling party tax panel said Monday.
Yoichi Miyazawa, who heads the tax system research committee of the Liberal Democratic Party, said in an interview with Kyodo News and other media outlets that he does not exclude the option of raising the income or corporate tax.
Work by Prime Minister Fumio Kishida's government to draw up a state budget for fiscal 2023, which will start in April, will culminate in December.
At issue is how big the nation's defense budget will become as Kishida plans to increase spending to "fundamentally" reinforce Japan's defense capabilities in the face of an assertive China, a nuclear-armed North Korea and Russia, which has unilaterally invaded Ukraine.
"If we are still short (of funds), we would have to tap tax revenue," Miyazawa said, adding that reducing spending on non-urgent items or projects should come first.
Under the war-renouncing Constitution, Japan has committed to an exclusively defense-oriented policy. The country's defense spending has long been capped at around 1 percent of gross domestic product.
The LDP is calling for raising the target to 2 percent or more within five years, meaning that defense spending will rise to around 11 trillion yen ($74 billion) as Japan's GDP is about 550 trillion yen.
The 2 percent target is in line with North Atlantic Treaty Organization member nations.
Even if the total amount is fixed, another focal point is how to fund it. Japan's debt is already twice the size of the economy.
"We will consider (funding sources) from scratch, including the income tax and corporate tax," Miyazawa said.
