Editorial
Political parties should clarify taxpayers' burden for promised policy measures
All political parties pledge to implement various policy measures during an election campaign. The situation has remained unchanged since political parties began to issue manifestos.
The largest opposition Democratic Party of Japan (DPJ) has pledged to provide a child allowance to households with children, make public schools free of tuition fees, guarantee certain levels of income for farming households and make expressways toll-free in its manifesto in a bid to place top priority on people's livelihoods. The DPJ says it will implement these measures on a step-by-step basis from fiscal 2010 if it takes over the reins of government. The Liberal Democratic Party (LDP) has bitterly criticized these measures as pork-barrel tactics.
However, it is the ruling coalition comprised of the LDP and Komeito that has compiled multiple supplementary budgets and used other funds to implement what should be regarded as the ultimate pork-barrel policy measures. The coalition issued additional government bonds and diverted reserve funds from the government's fiscal investment and loan program to finance these measures. Nevertheless, it criticizes the DPJ for being irresponsible because it fails to identify the financial resources for its policy measures. The ruling coalition deserves criticism for acting self-centered.
Regardless, questions have been raised over how the DPJ intends to fund its policy measures. In its manifesto, the main opposition party promises to secure 16.8 trillion yen for its policy measures for fiscal 2013 by reducing fiscal spending by 9.1 trillion yen, diverting 5 trillion yen from reserve funds in the fiscal investment and loan program and raising 2.7 trillion yen through reform of current special taxation measures. However, one cannot help but wonder whether things will work out that way.
It is only natural that the government should reduce the amount of wasted taxpayers' money and rationalize its fiscal spending. The ruling coalition has emphasized that since former Prime Minister Junichiro Koizumi initiated structural reform policies. The LDP will certainly incorporate that point in its manifesto. However, it is necessary to consider measures to make up for the cancellation of public works projects. The government can no longer rely heavily on reserve funds from fiscal investment and loan programs, whose balance has declined considerably. The amount of proceeds that the government can gain by selling its assets depends largely on land and share prices.
In order to steadily implement policy measures, it is indispensable to modestly estimate government revenue. This should be based on the assumption that the government can gain stable tax revenue. The DPJ's manifesto states that the financial resources for the child allowance would be gained by reviewing tax breaks for high income earners, but it stops short of identifying the sources of funds for other policy measures.
A drastic review of the special tax measures that the DPJ pledges is appropriate from the viewpoint of getting rid of vested interests in taxation.
However, in order to secure stable sources of tax income, it is indispensable to change the consumption tax, the income tax and asset taxes. The tax system should be drastically reformed in order to fundamentally restructure the economy. All parties should not evade discussing how much of the burden taxpayers should bear for policy pledges to prevent the measures from ending up being merely ways to attract votes in the upcoming general election.
A mid-term program that the ruling coalition worked out at the end of last year calls for legal revisions under which the 5 percent consumption tax can be raised in fiscal 2011 on condition that economic conditions will have improved by then. The LDP and Komeito should clearly state that in their respective manifestos.
Snowballing debts in the state budget are attributable to policy measures implemented by the LDP-Komeito alliance. Therefore, the ruling coalition is required to clarify how it will solve the problem.
(Mainichi Japan) July 29, 2009