Japan prime minister specifies 2％ of current GDP target for defense, security spending

The Yomiuri Shimbun

16:49 JST, November 29, 2022

Prime Minister Fumio Kishida has instructed the defense and finance ministers to boost Japan’s defense and security-related spending in fiscal 2027 to 2% of the current gross domestic product.

This is the first time Kishida has specified a concrete target for increasing defense spending. The prime minister also indicated his plan to decide at the end of the year on measures to secure financial resources for that purpose, with regard to both revenue and spending.

During a meeting with Defense Minister Yasukazu Hamada and Finance Minister Shunichi Suzuki on Monday, Kishida emphasized his intention to drastically strengthen Japan’s defense capabilities. After their talks, Hamada quoted Kishida as saying, “We need to devise various means first and then secure the necessary funds swiftly and surely, instead of saying we can’t do something because of insufficient financial resources.”

Based on the current GDP, about ¥11 trillion will be needed to achieve the 2% target. Defense spending in the initial budget for fiscal 2022 is about ¥5.4 trillion, or 0.96% of the fiscal 2022 GDP.

The 2% target would include spending for the defense budget, the budget for the Japan Coast Guard, costs for research and development conducted outside the Defense Ministry that contributes to Japan’s defense, and security-related spending, including that to build and improve social infrastructure.

The figure would be equivalent to 2% of the current GDP, not the GDP for fiscal 2027, apparently because Kishida wants to clarify the target currently being aimed at.

During the meeting, Kishida stressed the necessity to maintain and enhance defense capabilities in fiscal 2027 and afterward as well.

“It is the state’s responsibility to make maximum efforts for expenditure reform, But based on that, it is essential to take steps to secure financial resources to steadily support a defense buildup,” he was quoted as saying.

Kishida asked Hamada and Suzuki to decide on the scale of the defense budget in the Medium Term Defense Program for the coming five years, and on measures to secure financial resources for that purpose.

The government and ruling parties intend to drastically increase the scale of the Medium Term Defense Program from the current ¥27.47 trillion to more than ¥40 trillion.

Some lawmakers of the ruling Liberal Democratic Party have said tax increases are inevitable, but others are strongly opposed. One focal point will be whether the government and ruling parties discuss more specific tax items at the year-end.

Regarding how to secure financial resources to increase defense spending, Kishida said at a Budget Committee meeting in the House of Representatives on Monday, “I’d like to consider making use of the large budget prepared to deal with the novel coronavirus.”

Asked about the possibility of increasing corporate tax or income tax, Kishida answered, “I want to refrain from mentioning specific tax items.”