Photo/Illutration A Ground Self-Defense Force Type 10 tank during the Fuji Firepower Exercise at the East Fuji Maneuver Area in Shizuoka Prefecture in May (Pool)

Prime Minister Fumio Kishida has outlined a plan to finance his initiative to beef up Japan’s defense capabilities, but the viability of many elements of the financing plan remain highly questionable.

If the government forges ahead with this flawed plan, it could end up effectively debt-financing the defense buildup or pruning other expenditures to the bone.

The Kishida administration needs to confront the reality of the nations woeful state finances and shift from its size-first approach to bolstering its defense capabilities.

Kishida said Dec. 8 the government will require an additional 4 trillion yen ($29 billion) in its annual defense budget by fiscal 2027 to shore up the nation’s defense systems.

Under the blueprint for funding the effort he disclosed, much of the money would be raised through fiscal reforms or paid for from surplus funds in special budget accounts.

The remaining 1 trillion yen or so would be secured through tax increases.

Many lawmakers within the ruling Liberal Democratic Party are pushing for the budget expansion to be financed by government bonds.

It is vital to secure stable revenue sources to fund the initiative because it represents a permanent increase in government spending.

Piling on debt will not only worsen nations already feeble fiscal health but also open the door to unrestrained defense spending.

On the surface, Kishida’s financing plan appears to be an attempt to avoid deficit-financing the initiative. But closer scrutiny shows that many things could go wrong.

For instance, the surplus funds he plans to tap have been used as a key source to fund supplementary budgets.

Unless the government stops the practice of formulating massive extra budgets on an almost annual basis, this source will not be available for defense budgeting, forcing the government to issue new bonds to pay for increases in defense outlays.

That would be tantamount to debt-financing defense spending.

Kishida also said the government will make efforts to ensure that unused money in special accounts and in the budget for dealing with the novel coronavirus pandemic will be returned and made available for such use.

But this could cause disruptions in the programs the funds were originally intended to pay for.

Kishida also pledged to save a total of 1 trillion yen by fiscal 2027 through spending reforms.

But Finance Minister Shunichi Suzuki offered no clear ideas about the steps to be taken, saying only that various measures will be taken in each of the coming years.

A tax hike, if implemented, would produce a stable revenue source.

The administration says the corporate tax will be the main target. Corporate taxes were lowered by the administration headed by former Prime Minister Shinzo Abe.

Since many companies have used the savings from the tax cuts to build up their cash reserves or pay out larger dividends to shareholders, putting the financial burden mainly on businesses makes sense.

The onus is on the administration to figure out details of the corporate tax increase, including the timing.

Except for the tax increase, the administration cannot cite any viable revenue source.

This fact indicates the planned defense spending expansion is simply beyond the nation’s financial abilities and underscores the mistake of first setting the target of bolstering defense spending to an equivalent of 2 percent of gross domestic product.

The swollen defense budget the administration envisions includes such weapons programs as long-range ballistic missiles to strike enemy bases, which could eviscerate the basic principle of pursuing a strictly defensive security policy, and destroyers equipped with the Aegis missile defense system, whose cost effectiveness is in serious doubt.

The administration should first scrutinize all the weapons systems cited and rethink excessive or unreasonable expenditures.

Security is not the only policy challenge facing the nation.

The fiscal crunch has caused delays in policy responses to the aging of the population exacerbated by low birthrates, which the LDP has cast as a “serious crisis” for the entire nation.

It is also crucial to take steps to make Japan less vulnerable to predicted major earthquakes and other natural disasters.

It is the role of politics to determine the most appropriate distribution of limited revenue sources from a broad perspective.

--The Asahi Shimbun, Dec. 10