Prime Minister of Japan and His Cabinet  
Speeches and Statements by Prime Minister TOP
(Provisional translation)

Statement by the Prime Minister
on the Passage of the FY2008 Budget
and the Failure to Enact the Road-related Bill within FY2007

March 31, 2008

1. The FY2008 Budget was passed on March 28. It is unfortunate, however, that an unprecedented situation has arisen in which the bill on the taxation system of gasoline and other road-related taxes, and other bills, have not as of today been enacted.

2. I had hoped that the bill on gasoline could be smoothly enacted before the end of the fiscal year after meaningful discussions between the ruling coalition and the opposition parties. However, despite the intercession by the chairs of both the House of Representatives and the House of Councillors, the bill was not assigned to the relevant committee of the House of Councillors and deliberations on it did not even occur once in what amounted to an extraordinary set of circumstances. It is truly regrettable that this situation continued up to today, the end of the fiscal year.

As a result, the provisional rates of the gasoline tax and the light oil transactions tax have expired. I would like to extend my sincere apologies to the people and those involved in local governments for the problems that will be caused as a result of this.

3. On March 27, I announced my views on the revision of revenue sources earmarked for roads that take into consideration the opinions put forward by the opposition parties during the Diet deliberations, and other factors. Among the initiatives that I proposed at that time, I stated that revenue sources earmarked for roads will be reallocated to the revenues used for general purposes starting FY2009. In addition, I consider it important to maintain the provisional tax rate in FY2008, as outlined in the Government's original proposal, given the potential impact on national and local finances, the possible uncertainty introduced into business transactions, and the prospect of going against the aims of global warming countermeasures. I am fully determined to make my utmost efforts to ensure the maintenance of the provisional tax rate and that the decision on this matter is made as early as possible.

The abolition of the provisional tax rate will result in the loss to the national and local governments of a fiscal resource of 2.6 trillion yen, and it will weaken the people's trust in the nation's fiscal status. It may also result in a decline in the quality of administrative services in such areas as welfare and education, having a serious impact on the people's lives.

In addition, the abolition may make it difficult to implement the road budget, which is essential for regional vitalization and for guaranteeing safety and security. Furthermore, given the prevailing economic conditions, there is also a possibility that it will exert a negative influence on the economy. As such, we must move as quickly as possible to prevent any chaotic situations from arising.

Almost all of the prefectural governors, as well as others, made a sincere request for the maintenance of the provisional tax rate.

Going forward, bearing in mind the purpose of the intercession by the chairs of both Houses, I strongly hope that earnest discussions will be held in the House of Councillors and between the ruling coalition and the opposition parties, so that a conclusion can be reached as soon as possible. For my part, I will devote my utmost efforts to sweeping away, at the earliest possible juncture, any confusion that affects the Japanese economy and the lives of the people.

4. I fully understand that price increases such as the price of gasoline have resulted in the people experiencing great hardships. I will take whatever measures I possibly can in order to avoid any confusion in the lives of the people that comes about as a result of the confusion in politics. I am determined to carry out all measures necessary to limit, to as small a level at which it can be kept, any confusion that may occur in the distribution of gasoline, and to prevent any negative influence on the fiscal operation of the regions. A short time ago, I gave instructions to this end to the relevant ministers, who will provide to the people explanations on specific measures of which they will take charge.

The most powerful measure for responding to the current situation in which the downside risk of the economy is heightening is to steadily implement the budget enacted, and to enact, as quickly as possible, the bill on gasoline that ensures the budget implementation. In addition, in order to support the economy, the Government compiled emergency measures at the end of last year in response to such developments as the sharp rises in the price of crude oil, and also, in February of this year, it compiled measures focusing on small and medium enterprises that were to be implemented toward the end of the fiscal year. Amongst those measures, we have decided to take actions -- and we are now taking actions steadfastly -- for small and medium enterprises facing increased pressure on profits and difficult cash flow situations, and those in the fisheries and transport industries as well as people living in remote islands, who are being greatly affected by the rise in the crude oil price. The Government will compile the Urgent Measures for Enhancing Growth Potential this weekend, in an effort to strengthen the corporate foundation of small and medium enterprises and improve the situation of employment. Every effort will be made in these endeavors, and I ask for the people's understanding in this regard.

5. Recently, harsh criticism has been coming from the people for the inappropriate expenses of the road budget. As the head of the administrative branch, I offer my deep apologies to the people for this situation, which resulted in a serious loss of the people's trust. I believe that it is precisely by eradicating such expenses that we will be able to regain the trust of the people.

Furthermore, we must conduct fundamental reform of government expenditures across a broad spectrum, and comprehensively eliminate waste from the administration. We will further advance our efforts to thoroughly restrict single tendering procedures, to integrate or abolish independent administrative corporations, and to end the non-transparent practices of senior government officials obtaining posts in related organizations after retirement from public office.

Furthermore, I will carry out an intensive investigation of the public interest corporations with particularly close links to the administration, in light of the recent deliberations in the Diet and elsewhere, thereby aiming for zero waste in expenditures.

6. Politics must serve the public interest. We must never allow political issues to put a burden on the people. Whenever I consider policies, my focus has always been on the lives of the people, the future of Japan, and the standing of our country in the international community. In realizing these policies, I will, no matter what difficulties may appear, forge onward with all of my might, until I deliver the results. As I stated in my policy speech at the beginning of the year, I am determined to create that nest built on trust which fosters progress between the people on the one hand, and the administration and politics on the other, so that Japan will make progress towards a vibrant nation that contributes to the world. In this, I deeply call upon the people of Japan for understanding and cooperation.