According to Japanese media reports, Japanese Prime Minister Shigeru Ishiba will launch a 2.19 trillion yen (approximately 1.023045 trillion yuan) economic stimulus plan to address a series of challenges such as inflation and wage growth.
This plan is expected to receive approval from the Japanese Cabinet this Friday. Due to the fact that Shigeru Ishiba's ruling coalition currently holds only a minority of seats in the Japanese parliament, he needs to make concessions to the opposition parties in order to push for the plan and subsequent additional budget proposals to be passed in the Japanese parliament.
Shigeru Ishiba launches 21.9 trillion yen stimulus plan
The fiscal expenditure plan launched by Shigeru Ishiba will total 2.19 trillion yen (approximately 1.023045 trillion yuan), slightly higher than last year's 2.18 trillion yen (approximately 1.018374 trillion yuan) fiscal stimulus plan.
Among them, the estimated expenditure of the national general account is about 13.9 trillion yen (approximately 649.33 billion yuan).
The overall impact of the plan, including private sector spending, is expected to be around 39 trillion yen (approximately RMB 1821.862 billion), according to the report.
Previously, Shigeru Ishiba had made a key commitment in the election to alleviate the cost of living crisis for Japanese families. Therefore, according to the early draft of the plan, it will include supporting sustained wage growth in Japan and distributing cash to low-income families.
In addition, the Japanese government will resume subsidies for natural gas and electricity from January next year to protect Japanese households from the impact of rising commodity prices.
The plan will also focus on increasing investment in the semiconductor and artificial intelligence fields.
Japan's debt pressure will further increase
Due to the coalition government formed by the Liberal Democratic Party and its ally Komeito Party failing to win a majority in the previous Japanese parliamentary elections, the ruling coalition led by Shigeru Ishiba needs to make concessions to the opposition party, the National Democratic Party, to ensure that the funding for the bailout plan can be approved by the cabinet. This means that the full expenditure on measures to ensure the support of the National Democratic Party will be determined later.
According to Japanese media reports, the Liberal Democratic Party, Komeito Party, and National Democratic Party (DPP) will discuss annual tax reform for the next fiscal year, which will include raising Japan's tax-free income ceiling and reducing gasoline taxes. The above two reform measures were proposed by the National Democratic Party.
Keisuke Tsuruta, Senior Fixed Income Strategist at Mitsubishi UFJ Morgan Stanley Securities, said, "These numbers are roughly in line with expectations. The key is how much the tax-free income ceiling may be raised
If the tax exemption limit is raised from 1.03 million yen (approximately 48126.62 yuan) for annual income to 1.78 million yen (approximately 83189.49 yuan) as requested by the National Democratic Party, it may result in a tax loss of up to 8 trillion yen (approximately 373.88 billion yuan) for the Japanese government.
According to data from the International Monetary Fund, Japan's total government debt has grown to over 250% of its total economy, making it the country with the heaviest public debt burden among major developed countries. Due to the widespread expectation in the market that the Bank of Japan will raise interest rates again in December or January next year, Japan's debt repayment costs are also expected to increase.