Shoving Hand in Sufferers’ Pocket

Not satisfied with consumption tax hike, Prime Minister, Shinzo Abe, reportedly decided to end temporary addition of corporate tax for reconstruction from Great East Japan Earthquake. Although it would be for his political agenda of growth strategy, cutting budget for the reconstruction showed his incompetence on helping people who suffered from the disaster once in a millennium. But most sufferers living in shabby temporary houses are still waiting for permanent public houses to be built.

Under the administration led by Democratic Party of Japan, the Government of Japan decided to help people in devastated area with comprehensive burden of all people in Japan. In that context, Personal income tax was increased for 25 years for reconstruction. Resident tax will rise for 10 years starting next year. On the side of business, actual corporate tax rate has been raised for three years from 2012. However, Abe is willing to end the adoption of higher rate in FY2014.

Abe has been looking for fiscal resource for his growth strategy, which is recognized as the key of success for Abenomics. It is not clear, however, why he focused on reconstruction budget. He could imagine how he would be criticized of his sober attitude toward the reconstruction. Political damage would be bigger than obtaining resource for economic stimulus, for which the budget amounts to just about ¥900 billion. Lawmakers even with leading party are skeptical on his decision.

Ministry of Finance is opposing Abe’s idea not on the viewpoint of reconstruction, but fiscal order. If that ¥900 billion is not going to be included to national budget, it would be impossible to reach national goal to build healthy financial system. It is indicated that Minister of Finance, Taro Aso, is opposing Abe’s idea in terms of need for healthier structure of finance. If Aso is definitely against Abe’s idea, it should be the serious difference in the administration.

Abe had said in election campaigns that he would consider recovery from the great disaster as the most important issue in his administration. As watching his vague attitude on contaminated water in nuclear power generation plant in Fukushima, for example, he is not serious about helping people in Tohoku area where suffered from the great earthquake. To implement his promise, he needs to find other financial sources for his agenda of economic growth. As long as he leave the reconstruction behind nominal growth of economy, there would not be real success.