Approved Budget Proposal Set for Revision for 1st Time in Decades; Ruling Parties Likely to Accede to Opposition Demands

The Yomiuri Shimbun

18:43 JST, January 31, 2025

The government is preparing to amend the budget proposal for fiscal 2025, as the ruling parties are poised to swallow several expensive policy demands by opposition parties, The Yomiuri Shimbun has learned.

This would be the first time for a budget proposal to be revised since the one for fiscal 1991.

The Liberal Democratic Party and Komeito, which have been a minority ruling coalition since their crushing defeat in October’s House of Representatives election, have basically accepted that additional outlays will be required if they make concessions during policy discussions with opposition parties.

The Japan Innovation Party has advocated policies including making high school tuition free, and the Democratic Party for the People has called for the threshold at which income tax is imposed to be raised further.

According to multiple government and ruling party sources, the LDP and Komeito are leaning toward accepting that some opposition party demands will need to be incorporated into the budget for the fiscal year starting April 1.

The Constitution states that a budget is enacted 30 days after it is sent to the upper house following approval by the lower house. Consequently, the budget must pass the lower house by March 2 to ensure it will be enacted before the end of the current fiscal year. Work to amend the budget proposal is expected to take one or two weeks. The government is arranging to start this work around the middle of February, based on the outcome of discussions between the ruling and opposition camps.

The tuition-free high school policy demanded by the JIP would come with an estimated price tag of about ¥600 billion. The ruling coalition and the JIP have been discussing details including when the policy would come into effect and whether this would be offered to all households regardless of income. The JIP also has called for measures to reduce the burden of social insurance premiums.

“We want to make tuition-free high school and social insurance premiums conditions of our support for the budget proposal,” Seiji Maehara, co-representative of the JIP, said at a press conference Thursday.

The DPFP has been advocating the “¥1.03 million barrier,” which is the level above which annual income is subject to income tax, be raised to ¥1.78 million. However, implementing this plan would reduce the tax revenue. The ruling bloc agreed at the end of last year to raise this threshold to ¥1.23 million, but the DPFP believes this did not go far enough and has maintained its demand. Doing so could potentially create shortages in tax revenue of trillions of yen, but even some ruling party members have expressed acceptance that the threshold should be lifted further from the previously agreed level.

The total amount of general account of the budget proposal for fiscal 2025 climbed to a record-high ¥115.54 trillion. Accepting the policy demands of the opposition parties could cause this expenditure to inflate further.

The Constitutional Democratic Party of Japan has called for unnecessary spending to be slashed and has pushed policies including making school lunches free at public elementary and junior high schools.