Japan's parliament on Friday enacted a law to create a pool of funds to cover part of a substantial increase in defense spending to protect the country against security threats from its neighbors.
The bill cleared the House of Councillors despite attempts by major opposition parties to block it, enabling the government to set aside nontax revenues for multiyear use. The legislation is an integral part of Prime Minister Fumio Kishida's plan to spend a combined 43 trillion yen ($305 billion) through fiscal 2027 to bolster defense capabilities.
Under the current plan, the government will secure the necessary funding by selling government assets or tapping surplus funds in some special accounts of the state budget.
It will also conduct spending reform and then raise corporate, income and tobacco taxes to partly fund the defense budget increase, though Kishida is yet to decide on the exact timing.
The rise of an assertive China and nuclear-armed North Korea, and Russia's invasion of Ukraine have led to calls in the ruling Liberal Democratic Party for more spending to strengthen Japan's defense posture, a sensitive topic for the pacifist nation committed to an exclusively defense-oriented policy under its alliance with the United States.
Japan's defense budget has been capped at around 1 percent of gross domestic product, but defense-related spending will likely rise to 2 percent in fiscal 2027.
Last year, the Cabinet approved a plan to raise the taxes in fiscal 2024 or later, but the government appears to be tilting toward a delay to fiscal 2025 or later as Finance Minister Shunichi Suzuki has said a decision will be made "flexibly."
Opposition party lawmakers have criticized Kishida for focusing on the size of defense spending rather than its substance. The Constitutional Democratic Party of Japan is among the major opposition parties against the tax hike plan.
The bill's passage by the ruling coalition-controlled upper house came after a parliamentary committee vote was delayed earlier in the week as the opposition bloc demanded more time for deliberation.
It cleared the more powerful House of Representatives in late May after Suzuki survived a no-confidence motion submitted by opposition party lawmakers.
