Policy Proposals Economic Policy, Social Security Toward Fiscal Consolidation and Efficient Fiscal Management
The Japanese government will soon compile basic principles for Japan's economic and fiscal policy. In consideration of the circumstance, Keidanren published a proposal, "Toward Fiscal Consolidation and Efficient Fiscal Management."
In the proposal, the government's current flexible fiscal spending is commended, but at the same time, considering the severity of Japan's fiscal conditions, Keidanren calls for immediate actions to step up efforts for restoring the nation's fiscal soundness which can coexist with sustainable economic growth.
Major measures in the proposal
1. Early implementation of growth strategy
The government needs to solidify an economic recovery on a boarder front. At the same time, through early implementation of its growth strategy including measures such as regulatory reform, it is required to strengthen the fundamentals of the Japanese economy in order to achieve the nation's fiscal reconstruction.
2. Steady rise in consumption tax rate
As stipulated in a law related to the comprehensive reform of social security and taxation systems that was passed in the summer of 2012, the consumption tax rate should be steadily raised to 8% in April 2014 and to 10% in October 2015 to mark the first step towards fiscal reconstruction.
3. Clear roadmap for achievement of surplus in primary balance
The government needs to show quantitative improvement targets for revenues and expenditures necessary for achieving a surplus in the primary balance by FY 2020. Also, these targets should be legislated in order to reinforce the government's commitment towards fiscal reconstruction.
4. Well-balanced containment and streamlining of expenditures
The social security benefits should be streamlined and prioritized. The government also needs to promote administrative and fiscal reforms in local governments, concentrate on key infrastructure investments that contribute to strengthening Japan's international competitiveness, and utilize private finance initiatives (PFI) and public-private partnership (PPP).
5. Improvement of plan-do-check-act (PDCA) cycle for fiscal management
The government needs to reinforce fiscal management and evaluation functions from the viewpoint of total optimization as well as to promote electronic administration accompanied with business process re-engineering (BPR).