Japan’s lower house of parliament has passed the ¥115.2 trillion ($771 billion) budget for the fiscal year starting in April, marking a significant victory for Prime Minister Shigeru Ishiba as he prepares for national elections this summer, Bloomberg reports.
The budget’s approval strengthens his leadership and demonstrates his ability to navigate a minority government.
Despite operating with a minority in the lower house, Ishiba successfully steered the budget through a plenary session on Tuesday. The budget now moves to the upper house, where the ruling coalition holds a majority, effectively guaranteeing its enactment before the new fiscal year.
The approved budget is a revision of the initial ¥115.5 trillion proposal, marking the first time in 29 years that a budget has been revised after cabinet approval. This adjustment reflects successful negotiations with opposition parties, allowing Ishiba to address their concerns without allowing spending to escalate uncontrollably.
Social security costs, reflecting Japan’s aging population, constitute the largest expenditure at ¥38.3 trillion. Debt servicing follows at ¥28.2 trillion, highlighting the nation’s significant debt burden. Defense spending has increased to ¥8.5 trillion, a 9.7% rise, as Japan responds to growing regional security tensions.
To secure crucial support, Ishiba’s coalition revised the budget to include increased subsidies for households with high school students, a key demand of the opposition Ishin Party (Japan Innovation Party). The budget also maintains a cap on out-of-pocket expenses for high-cost medical care, a priority of the main opposition Constitutional Democratic Party of Japan.
Despite these additions, Ishiba successfully reduced overall outlays by ¥343.7 billion through cuts to reserve funds and tax allocations to local governments.
Furthermore, the revised budget raises the tax-free income threshold to ¥1.6 million, exceeding the initially proposed ¥1.23 million. While the Democratic Party for the People had advocated for a ¥1.78 million threshold, an agreement was ultimately reached at the lower figure.
With the budget now poised for final approval, each party is expected to highlight their respective contributions and influence on policymaking as they campaign for the upcoming Upper House election in July.
