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Japan government advisers recommend broaden tax burden for defence budget

A Japanese panel of experts advising Prime Minister Fumio Kishida on Tuesday recommended broad tax measures to pay for the hike in defence spending while cautioning against raising debt that could expose the nation to international market changes.

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The recommendations come while Kishida’s administration struggles to procure the budget to pay for its pledge to substantially increase defence spending in an attempt to counter what Tokyo sees as a growing security threat posed by neighbouring China.

The report from the panel of Kishida’s advisers stated that it is necessary to win public understanding with a range of tax measures to spread the burden, and that the entire nation must recognise the need to cooperate in the endeavor.

The group, which pointed to the financial market worry that sparked a fall in the British pound, also urged the government to rein in other government spending to ensure the stability of public finances.

Choosing a tax increase to pay for Japan’s biggest military build up since World War Two means Kishida may have to decide whether to ask businesses to pay more corporate tax rates or seek a bigger contribution from individuals through higher income taxes or other means.

Kishida will be announcing a revised national security strategy and midterm defence build up plan by the end of the year, while the Liberal Democratic Party would discuss the group’s recommendations. The ruling group has already said it wants to double military spending to around two percent of gross domestic product over the next five years.

It wants the extra money to help pay for new munitions, including longer-range missiles capable of striking targets over 1,000 kilometres from Japan’s islands that could deter Chinese forces from attacking Japan or neighbouring Taiwan, and that could also be used to hit missile sites to thwart potential North Korean attack.

The expert panel led by former Vice Minister for Foreign Affairs Kenichiro Sasae agreed that Japan needed to reinforce its Self Defense Forces to deter China.

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