JAPAN FINISHING UP WORK ON SUPPLEMENTARY BUDGET
The Finance Ministry is putting the
finishing touches on a roughly 2,000 billion yen supplementary
budget for 1987/88 and has started to turn its attention to
next year's main budget, ministry officials said.
    The supplementary budget is designed to help finance the
6,000 billion yen emergency economic package the government
unveiled last month to boost domestic demand.
    Ministry officials said the government would issue about
1,300 billion yen in construction bonds to help pay for the
increased public investment set out in the emergency package.
    The rest of the supplementary budget will be financed by
450 billion yen in proceeds from last year's sale of shares in
Nippon Telegraph and Telephone Corp (NTT) and by higher than
expected 1986/87 tax revenues, officials said.
    One official said the carry-over of tax revenues into the
1987/88 fiscal year that began on April 1 might be more than
1,000 billion yen. Soaring land and share prices have boosted
receipts, especially from securities and land taxes.
    With less than half of the carry-over likely to be used in
the current supplementary budget, the rest will be available
for a second supplementary budget expected later this year.
    The second supplementary budget will be used to finance the
government's wage bill, which will not be known until after
wage talks later this year, one official said.
    The government must also finance the tax cut of more than
1,000 billion yen which it promised in its emergency package
but which will not be contained in the first supplementary
budget, due to be presented to parliament next month.
    The Finance Ministry's budget bureau is hoping the tax
carry-over and higher than expected revenues again this year
will be enough to finance the second supplementary budget, he
said.
    Officials said the Finance Ministry does not want to issue
deficit-financing bonds or use the extra proceeds from this
year's NTT share sale to fund the second supplementary budget.
    Besides the first supplementary budget, the government also
intends to introduce a new tax reform bill to parliament during
the upcoming extraordinary session, officials said.
    The government was forced to abandon its first tax reform
bill due to strong opposition to its plan to introduce a five
pct sales tax.
    The sales tax was designed to help finance cuts in
individual and corporate income taxes.
    The new bill will present the 1,000 billion yen-plus tax
cut contained in the emergency package as the first step to an
overhaul of the country's tax system, officials said.
    It will also contain a controversial plan to phase out tax
breaks on savings, although it may not take effect in October
as originally planned, they said.
    Looking ahead to next year's main budget, the Finance
Ministry is beginning to debate whether to abandon its
so-called minus ceiling for public investment.
    That policy calls on government departments to cut public
investment spending by five pct per year.
    Economic Planning Minister Tetsuo Kondo said recently the
policy would be suspended in 1988/89, pending a recommendation
from the government's administrative reform council.
    The ruling Liberal Democratic Party said in April that
budget request guidelines for invesment expenditures would be
reviewed.
    But some officials at the Finance Ministry's budget bureau
said they were hopeful the policy would be retained.
    They fear that a suspension of the guidelines for public
investment could lead to increased pressure on the government
to loosen its grip on current expenditures as well.
    The account would also extend interest-free loans to
profitable public works projects developed in conjunction with
the private sector, the officials said.
    In this way, the Finance Ministry could meet growing
pressure on it to boost capital spending while maintaining a
tight grip on outlays by other government departments.
    Surplus funds from this year's sale of NTT shares could
total about 3,000 billion yen. Based on the current market
price, the planned sale of 1.95 mln shares would raise more
than 5,000 billion yen, compared to about 2,000 billion planned
for in the main 1987/88 budget.
 REUTER
