Japan eyes 60 trillion yen in defence spending over next 5 years

The Defence Ministry estimates that necessary defence expenditures for the five years will total 70 trillion yen to 80 trillion yen, while the Finance Ministry is arguing for spending 60 trillion yen below, informed sources said Friday.
   
With Prime Minister Sanae Takaichi reportedly reluctant to raise taxes to fund defence spending, a battle between the Finance and Defence ministries over spending levels and how to secure the necessary funding is intensifying.
   
Japan's Defence Buildup Program, one of the three key documents, will include the country's total defence spending from fiscal 2027 through fiscal 2031.
   
The government plans to focus on responding to new ways of warfare, such as the use of artificial intelligence and drones, as well as strengthening so-called denial capabilities to prevent adversaries from achieving their strategic and tactical objectives. Specifically, the plan is expected to feature large purchases of drones, missile procurement and improvements in Japan's ability to sustain military operations.

Based on these priorities, the Defence Ministry estimates that necessary spending over the five years could reach as much as 80 trillion yen, nearly double the 43 trillion yen allocated under the current program for fiscal 2023-2027.
   
The Finance Ministry is set to reject such a spike in spending, with a senior ministry official calling the estimate "an astronomical figure" and "out of the question."
   
Meanwhile, a senior official at the prime minister's office criticised the Finance Ministry's proposal to limit spending to below 60 trillion yen (US$375.6 billion), saying, "Given fluctuations in exchange rates over the past few years, it would amount to an effective spending cut and would be difficult to justify to the international community."
   
Members of the ruling Liberal Democratic Party with expertise in defence policy have also voiced opposition to the proposal as unacceptable.
   

The administration of US President Donald Trump has called on its allies to raise defence spending to the equivalent of 3.5% of gross domestic product. Japan's GDP for the current fiscal year is expected to total about 690 trillion yen, up significantly from around 560 trillion yen in fiscal 2022, which served as the basis for the current program.
   
Total spending below 60 trillion yen would mean annual spending of 10 trillion yen to 12 trillion yen, falling short of even 2% of GDP.
   
The government is struggling to secure funding for the increase in defence spending. It aims to secure permanent revenue sources for the expenditure hike, with a senior government official saying, "We must raise taxes and issue additional government bonds if necessary."
   
Still, people close to Takaichi say she is reluctant to raise taxes while pursuing a consumption tax cut on food products. The business community opposes an increase in corporate taxes, arguing that it would dampen companies' willingness to invest.
   
In the current security documents, Japan set a target of increasing defence spending and related expenditures to a combined level equivalent to 2% of GDP by fiscal 2027. The government secured funding for the spending increase through spending reforms and tax hikes on corporate, income and tobacco taxes.

[Copyright The Jiji Press, Ltd.]