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It is important to "embark on financial reform," and without concrete proposals, financial reform will be meaningless

The first point is to make sure that the issue does not end in a short-term policy of "One hare or two hares." Of course, it is important to get the timing right to start public finance reform, but even more difficult than the timing is the actual embarking on reform, because financial reform is more of a political problem than an economic policy. It would be possible to write a prescription for financial reform as an economic policy. But expenditure cuts and reform of the tax system also mean changing the composition of existing political vested rights, and whether or not this prescription can be implemented depends oh political judgment. For example, the present lack of a solution is rooted in the question of whether financial reform will be difficult even if the economy picks up, and the essential problem is not choosing "One hare or two hares."

The second point is that without concrete proposals, financial reform is meaningless. The present state of public finance was not brought about solely by economic measures after the bursting of the bubble. Review of the structure of annual expenditure is a long-pending question, and even in the financial reconstruction of 1980, only an across-the-board cut in annual expenditure was implemented and no review of the structure of annual expenditure was carried out. In that sense, this is a difficult problem that is being tackled for the first time.

Simply pledging to "reduce wasteful expenditure" and "carry out administrative reforms" is not the answer to this difficult problem. Each party must put forward a concrete plan showing which items they would cut and by how much, how they would implement administrative reforms and what cuts they would make. As the support base of each party is revealed by what expenditure is given priority, the voters cannot choose without such a plan. As for reform of the tax system, consumption tax is a key issue. The points to be clarified are, will consumption tax be the main source of revenue supporting welfare, what percent tax is forecast in future, and will there be a conversion to the invoice system.

 

 

 

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