Short of anticipated revenues thanks to a delay in the consumption tax hike, and amid a snowballing social security bill, the Abe administration had a tough time drafting the fiscal 2015 budget and making it jive with its ambition to rehabilitate the nation's finances, analysts say.
A key question in drafting the record ¥96.3 trillion budget was how to make up for the originally projected ¥1.5 trillion in tax revenue lost because Prime Minister Shinzo Abe postponed the 2 percentage point hike, to April 2017 from October this year. That revenue was earmarked for social security costs, which represent one-third of the latest budget.
"My impression is that the administration gathered up whatever it found available to make up for this ¥1.5 trillion" in lost revenue, said Takero Doi, a public finances professor at Keio University. Doi believes the administration aimed to meet the goal of cutting the primary budget deficit by half from the level in fiscal 2010 by any means available. There is evidence for this, he said, in the increase in nontax revenue.
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