Japanese Prime Minister Fumio Kishida recently unveiled an ambitious plan to double the country's defence budget to ¥43 trillion, roughly 2% of Japan's GDP, over the next five years. Notably, the country's massive rearmament programme, its biggest since the end of World War II, has not triggered a political or public backlash. With Japan facing multiple security threats, including North Korean missile tests, Chinese coast-guard ships encroaching on its territorial waters and Russia's militarisation of the disputed Kuril Islands (known in Japan as the Northern Territories), polls show public support for the proposed increase.
But the question of how Japan will pay for this massive military build-up has been the subject of intense controversy. Mr Kishida initially planned to fund the spending increase by raising taxes. The plan they produced included higher taxes on personal incomes, corporate profits and tobacco. But it did not include a much-needed increase in the rate of value-added tax (VAT), also known as the consumption tax, and was projected to fall short of covering the costs of the proposed budget increase.
