One of the key highlights of Japan’s three national security documents released on December 16, 2022 – the National Security Strategy, the National Defense Strategy and the Defense Build-up Plan (DBP) – is the commitment to increase defense spending.
The 2022 DBP revealed that the Japanese government will spend approximately 43 trillion yen (US$310 billion) from 2023–27 to fund the defense capability build-up. Japan’s Ministry of Defence (JMOD) budget will increase annually to reach 8.9 trillion yen (US$64.1 billion) in 2027.
The 2023 defense budget demonstrates Tokyo’s determination to follow through on its five-year spending commitments under the DBP. The total budget of over 6.6 trillion yen (US$47.5 billion) is a 27.5% increase from 2022 and the biggest defense budget in Japan’s post-war history.
But the “roughly 2% of GDP” goal that Prime Minister Fumio Kishida discussed in his press conference on December 16, 2022 following the announcement of these three documents is slightly misleading. The 2% includes not only the JMOD budget but also other national security-related spending such as the Japan Coast Guard budget and national infrastructure investments.
Still, the JMOD’s 2023–27 budget plan is 60% higher than the 2018–22 spending plan. As a country that historically spent roughly 1% of its GDP on defense and resisted calls to spend more, Tokyo’s commitment to such a considerable increase marks a departure from the past.
Highlights from these new documents — such as Japan’s acquisition of counterstrike capabilities and a substantial defense spending increase — continue to grab news headlines. But funding remains a thorny issue. The Liberal Democratic Party (LDP)–Komeito ruling coalition has been working on fiscal measures that will enable Tokyo to follow through on its defense spending commitments.
In December 2022, based on the LDP–Komeito’s approved outline, the Ministry of Finance included ‘tax measures to secure financial resources for strengthening defense capabilities’ in its seven-point 2023 tax reform proposal. These are incremental increases in the corporate, income and tobacco taxes proposed to start after 2024.
The LDP-led ruling coalition introduced the Defence Fiscal Resource Bill to the National Diet in February 2023. The bill provides the fiscal framework through which the Japanese government will fund the defense spending increase — which is essentially a mixed package of the establishment of the Defense Enhancement Fund and the incremental phased increase of corporate, personal income and tobacco taxes.
The bill passed the House of Representatives on May 23, 2023, and following the approval by the House of Councillors on June 16, 2023 became a law.
The opposition parties, including the Constitutional Democratic Party, vowed to block the bill. But the large majority that the LDP–Komeito ruling coalition enjoys in both houses of the Diet, with the additional support from the conservative Japan Innovation Party, cleared the way for the passage of the bill.
Even though Kishida won the legislative battle, whether the public will support it remains highly questionable.
In fairness, the majority of the Japanese public supported a defense spending increase. Polls taken by media outlets across the ideological spectrum throughout 2022 consistently show that the public mostly supports a defense spending increase.
Three separate media polls taken in April, October and December 2022 show that over half of the respondents supported a defense spending increase. Even a May 2022 poll by the Mainichi Shimbun, known for its criticism of expansive defense policy, shows 76% public support for such an increase.
But the public resisted funding this defense spending increase through higher taxes. Public resistance against tax increases began showing in late 2022. Two polls in November and December 2022 showed that over 60% of the public disapproves of such a tax hike.
This public pushback against the defense tax increase continues in 2023. Polls in January and February 2023 showed 71% and 64% of the respondents were against increasing tax to fund defense budget increase.
A May 7, 2023 public opinion poll revealed that nearly 90% of the respondents are concerned about a military crisis in Taiwan and over 60% support Japan acquiring counterstrike capabilities. But 80% are opposed to financing defense spending through tax increases.
Plus, Kishida might have missed the chance to gain public support for the defense tax hike by bringing the case to the public. Two separate polls conducted in January 2023 indicated that 78% and 63% of the respondents thought that Kishida should dissolve the Lower House and call an election before implementing the defense tax hike.
But with his approval rating just recovering to 45% following a successful G7 summit in Hiroshima, Kishida decided not to dissolve the Lower House, at least in the near future.
The Japanese public seems already to be reacting negatively to Kishida’s choice. The June 17–18 poll conducted by the Kyodo News shows that Kishida’s approval rating has dropped by over 6 points to 40.8%.
While the defense-related tax hike was not the only reason for the decline in his approval rating, it indicates that Kishida’s tactics of steamrolling widespread public resistance with the power of majority might work in the short-term, but may undermine the sustainability of Japan’s increased defense spending over time.
Yuki Tatsumi is Senior Fellow, Co-Director of the East Asia Program and Director of the Japan Program at the Stimson Center, Washington, DC.
This article was originally published by East Asia Forum and is republished under a Creative Commons license.