Japan Weighs Corporate Tax Hike for Defense Spending

Finance Minister Satsuki Katayama announced that the Japanese government will prioritize fiscal sustainability while determining how to fund increased defense spending. The announcement follows reports that the administration is considering an additional corporate tax hike to finance a new five-year defense spending plan, which is expected to be released by the end of this year.

Unnamed administration officials suggest the new plan could require between 70 trillion and 80 trillion yen. Japan increased spending to 1.9% of gross domestic product last fiscal year and is now considering a target of 3.5% to align with NATO and other U.S. allies. Katayama stated that decisions on spending will be based on Japan's independent judgment.

The funding debate occurs as the government finalizes its budget for the fiscal year starting in April. Officials are balancing defense requirements against other national initiatives, including strategic industry investments and a consumption tax cut on food.