The Government of Japan is likely to inject 6 billion yen ($ 57 billion) in direct tax expenditures in the economy in the coming years under a stimulus package expected, twice the amount initially planned, the Nikkei newspaper reported Tuesday.
The Ministry of Finance had initially allocated 3 trillion yen for the direct expense of national and local in the context of its proposed fiscal stimulus governments. But the amount doubled in requests for greater spending by government officials and ruling party lawmakers, the Nikkei said without citing sources.
Finance Minister Taro Aso told reporters that the government is still debating the size of the stimulus spending but expects to make a decision soon. A draft of the plan obtained by Reuters on Tuesday shows spending will focus heavily on infrastructure.
Prime Minister Shinzo Abe, emboldened by a great electoral victory earlier this month, is the game in infrastructure spending to revive growth amid disappointment that his reforms have not done enough to improve the economy.
“Instructions Prime Minister must focus on investing for the future,” Aso told a news conference.
“We need a bold and comprehensive package, but it will take a little more time to complete it.”
The size of the spending could rise further as the government introduced draft stimulus plan for negotiations with ruling party lawmakers on Tuesday, according to the Nikkei report.
The total size of the package, which could be announced as early as August 2, could exceed 20 trillion yen, the Nikkei said.
To finance part of the package, the government will draw up a supplementary budget for the current fiscal year of about 2 trillion yen, the paper said. The rest will be financed in the budget for the next fiscal year starting in April 2017, he said.
DIRECT, indirect support
The draft spending plan obtained by Reuters showed details of the stimulus package, extending loan guarantees and lending rates reduce financing systems for small and medium enterprises.
The Japan Bank for International Cooperation will use credit schemes to support small businesses operating abroad amid concerns that the departure of Britain from the European Union could prejudice access to credit.
The government will use public-private investment to advance the construction of a maglev line for up to eight years and expand the network of conventional high speed train.
The package will also invest in hotels and improve public transport to welcome more tourists, including the increase of visitors expected for the 2020 Tokyo Olympics.
The government plans to increase infrastructure spending to boost agricultural exports and to shore up the infrastructure in many disaster-prone areas of Japan.
The stimulus package will increase the wages for workers in day care centers and nursing homes, two industries that are struggling to attract workers to meet growing demand.
The project also shows that the government plans to strengthen enforcement of labor laws to reduce the wage gap between regular and part-time employees doing the same work.