With the next general elections expected to be held soon, both Prime Minister Taro Aso and the Democratic Party of Japan led by Mr. Ichiro Ozawa are making policy proposals designed to appeal to as many voters as possible. Given the nation's past experiences and its financial conditions, both need to carefully flesh out their election promises.
Following an agreement with Komeito, Mr. Aso is pushing for a fixed-amount income tax reduction, which will benefit middle- and low-income families. This will be incorporated into a supplementary budget for fiscal 2008, which is likely to be discussed in the Diet soon.
Mr. Aso says that the government will start covering half the basic portion of pensions with tax money from April 2009, instead of the current one third. But he does not explain where the necessary funds to carry that out will be found. He also hints that he will not be bound by the government goal of bringing the primary balance in the budget (the comparison between revenues not relying on debts and spending excluding debt service cost) into the black in fiscal 2011.