Japan's Military Buildup Collides with Fiscal Reality
Japan's government is facing criticism over its military buildup and economic policies. The latest public opinion poll shows that only 50.2% of respondents approve of the Takaichi Cabinet, down from previous levels. Meanwhile, 71.7% are worried about Japan's fiscal health.
The proposed cut in consumption tax on food has been met with skepticism, as many believe it will make it difficult for the government to sustain its social security system without alternative revenue sources.
Takaichi's plan is to reduce the tax from 8% to 1%, which would leave a substantial hole in the budget. The proposed investment program of 370 trillion yen over 14 years may help strategic industries, but it cannot substitute for productivity growth and labor reform.
The military budget request for fiscal year 2027 stands at a record 8.9 trillion yen, with the final tally expected to exceed 10 trillion yen. Japan's public debt burden is already one of the heaviest in the developed world, making it difficult to raise interest rates without facing debt mountain concerns.