Fiscal 2004 Budget Approved by Cabinet

24 December 2003

Tadayoshi Kusano
General Secretary

  1. The cabinet has approved the government’s draft budget for fiscal 2004 today, with the general account amounting to 82.11 trillion yen. However, the budget ignores the voice of the people longing for the stability in both employment and living. It only aims at balancing fiscal income and expenditure under the name of fiscal reform and will result in an additional pain on the people and a further worsening of the social unrest. It must be therefore redrafted completely.
    The draft supplementary budget of 1,442 billion yen for fiscal 2003 has been also approved. This does not incorporate any economic measure and therefore deserves no consideration at all.

  2. There is an increase within the general account in social security costs by 800 billion yen which is balanced with cuts in other areas. As part o the “three-in-one” reforms*, payments to local authorities through the local allocation tax will fall by 900 billion yen and regional subsidies by 1,000 billion yen, while only 425 billion yen in fiscal resources will be transferred to the locals from the central government in the form of the newly established local transfer tax on income. In the area of public works, shares among projects will mostly remain the same. Annual priorities that have been criticised for unchanged substances under new names will be implemented as usual without investigating the real state. The purpose of “model projects” and “policy clusters” is understandable, but remains open to questions about effectiveness, as well as who and how will be responsible for managing such projects particularly in a situation where there is no strict body to access policies.
    Concerning revenues, government bond issuance will reach a record of 36.59 trillion yen as fiscal deficits have been even increasing due to lack of effective economic measures. Before forcing an additional burden upon the people simply to secure sufficient revenues, the government must carry out drastic tax reforms including through correcting unfair tax practices, such as “9-6-4” income tax rates***.

  3. The government has postponed a promise that government’s share of basic pension contributions be raised to one-half in fiscal 2004 for the reason of insufficient revenue. Furthermore, any measure has not been taken for drastic pension reforms, which will deepen people’s distrust of pension, worsen the hollowing out of the pension system and result in further stagnant consumption. Such irresponsibleness should not be accepted and the responsibility of politics should be sought.
    Employment measures include 7.5 billion yen for Japanese ‘dual (training) system’. However, the amount is not sufficient to tackle the increasingly severe situation of youth employment. Drastic expansion, including the expansion of beneficiaries and supplement with life support measures, is necessary.

  4. Rengo has been repeatedly calling the government to implement economic and fiscal policies prioritising autonomous economic recovery through boosting domestic consumption and then to change its direction into the rebuilding of financing once recovery is achieved at certain level, in order to overcome today’s non-prospective, long-term depression and high unemployment.
    Fiscal 2004 budget must be redrafted so as to aim at establishment the stability in employment and living, bringing government responsibilities for job creation, lower unemployment and improved social security bases into the heart. Rengo will strengthen cooperation with opposition parties, particularly with the Democratic Party of Japan, and work to realise these demands with all its might.

    *The “three-in-one” tax reforms consist of cuts to regional subsidies, the transfer of tax revenues to local governments and a review of the local allocation tax.
    **90%, 60% and 40% of incomes of salaried employees, entrepreneurs and farmers respectively are captured for tax purposes.