TOKYO (Reuters) -The head of tax policy at Japan’s ruling Liberal Democratic Party (LDP) said on Friday that raising corporate taxes was an option to fund the country’s defence build-up, the Nikkei newspaper said.
“A somewhat large tax should be considered if there are expectations for a sizeable tax revenue,” Yoichi Miyazawa, chair of the LDP’s tax commission, told the Nikkei in an interview.
The idea of issuing more government bonds to fund defence spending is “utterly irresponsible,” Nikkei also quoted Miyazawa as saying, playing down the likelihood of adding to the country’s massive debt burden for it.
Japan’s defence ministry has asked for a 3.6% rise in spending to 5.6 trillion yen ($37.98 billion) for next fiscal year starting in April, as Prime Minister Fumio Kishida’s government seeks to build up military capacity.
That equals about 1% of Japan’s gross domestic product (GDP) of 544 trillion yen. Japan’s public debt burden is the industrial world’s heaviest at more than twice the size of GDP.
Kishida’s LDP has pledged to double defence spending to 2% of GDP over five years, which would imply raising it by about 5 trillion yen.
Besides corporate tax, the government and ruling coalition were also considering hikes in financial income and tobacco taxes, Jiji news agency reported last month.
Makoto Nishida, Miyazawa’s counterpart at LDP’s junior coalition partner Komeito, has also flagged the possibility of raising tax, rather than issuing debt, to fund the defence build-up in a Reuters interview in late September.
($1 = 147.4400 yen)
(Reporting by Kantaro Komiya and Daniel Leussink; Editing by Ana Nicolaci da CostaEditing by Chang-Ran Kim)
