Construction bonds eyed to fund improvements to SDF facilities

The Yomiuri Shimbun

21:00 JST, December 13, 2022

The government is considering using government construction bonds to fund the development of Self-Defense Force facilities, The Yomiuri Shimbun has learned.

The government intends to allot about ¥1.6 trillion in construction bonds by fiscal 2027, according to sources.

A plan is also being compiled to raise corporate tax, a special income tax for reconstruction and tobacco tax from fiscal 2024 in steps to fund increased defense spending.

On Monday, the government presented a framework for measures to secure funds for an increased defense budget at a meeting of a working group reviewing three security-related documents, including the National Security Strategy.

Traditionally, construction bonds are used for roads, bridges and other infrastructure projects that will benefit people for generations. The Finance Ministry has not permitted the use of construction bonds to fund SDF facilities on the grounds that such facilities have a short lifespan.

During a Diet debate in 1966, Finance Minister Takeo Fukuda said it is not appropriate to issue government bonds for defense spending, which he characterized as an exhaustive expenditure.

However, construction bonds have been allocated for Japan Coast Guard ships. There have been calls in the ruling Liberal Democratic Party for the bonds to be used to strengthen the capabilities of the SDF, among other purposes.

The government plans to drastically increase defense spending, allocating a total of about ¥43 trillion from fiscal 2023 to fiscal 2027. About ¥4 trillion will be needed to enhance SDF facilities.

Regarding tax increases to raise funds for defense spending, executive members of the LDP’s Research Commission on the Tax System have confirmed a plan to secure ¥700 billion to ¥800 billion through corporate tax, ¥200 billion from a special income tax for reconstruction and ¥200 billion from tobacco tax.