Japan's lower house on Tuesday approved a bill creating a special pool of funds to substantially increase defense spending despite opposition lawmakers' resistance.

If enacted, the law will allow the government to set aside non-tax revenue derived from selling government assets or transferring money from its special accounts in the state budget, specifically for use in defense spending over multiple years.

The House of Representatives approves a bill to create a special pool of funds for defense spending, during a plenary session in the parliament in Tokyo on May 23, 2023. (Kyodo)

For fiscal 2023, the first of a five-year period that will see Japan's defense spending reach a combined 43 trillion yen ($310 billion), the government has allocated over 3.38 trillion yen for defense funds.

The bill's passage through the ruling coalition-controlled House of Representatives set the stage for its enactment after it clears the House of Councillors. Major opposition parties remain opposed to the bill, largely because they are against raising taxes to boost the defense budget.

Prime Minister Fumio Kishida is seeking to bolster Japan's defense capabilities to cope with threats posed by the rise of an assertive China and nuclear-armed North Korea and Russia.

To secure the necessary funding, the government will review how money is spent in areas other than defense, tap non-tax revenue, and raise corporate, income and tobacco taxes. The exact timing of the tax hikes is yet to be determined.

Japan's fiscal health is the worst among developed nations, with debt already more than twice the size of the economy.

Besides defense spending, Kishida is also planning to boost child policy-related spending to cope with the falling birth rate.

Japan has long capped defense spending at around 1 percent of its gross domestic product but plans to raise defense-related spending to roughly 2 percent by fiscal 2027. The defense budget for the current business year is at a record 6.82 trillion yen.

During lower house deliberations, the major opposition Constitutional Democratic Party of Japan submitted a no-confidence motion against Finance Minister Shunichi Suzuki, though it was voted down by the ruling coalition of the Liberal Democratic Party and Komeito, along with some opposition parties.