According to an exclusive report by the Japan Keizai News on October 17th, several sources revealed that as the Japanese government progresses with the revision of the 'Security Three Documents', defense expenditures are expected to increase significantly. The Japanese government has considered raising corporate tax, hoping to provide a stable source of funding for ongoing military expansion.
According to Japan's current Defense Forces Development Plan, for the fiscal years 2023 to 2027, Japan's total defense expenditures are approximately 43 trillion yen (1 yen is roughly equivalent to 0.042 yuan). The defense budget for the fiscal year 2026 has reached about 9 trillion yen, including costs related to the reorganization of US military forces stationed in Japan.
According to Kyodo News, the next version of the Defense Forces Development Plan covers fiscal years 2027 to 2031. The key measures include the procurement of a large number of drones, as well as the stockpiling of equipment such as ammunition and missiles needed for long-term warfare.
A senior official from Japan's ruling authorities revealed that if simple estimates based on the equipment and force construction scale deemed necessary by the Ministry of Defense are used, defense spending over the next five years could swell to 70 to 80 trillion yen. This means that Japan's annual defense spending is likely to increase to more than 10 trillion yen.
Such huge military expenses will inevitably put greater pressure on Japan's finances.
Joint tax revenue collection, apart from considering raising corporate taxes, Japan government is also researching how to raise funds by reducing other fiscal spending. However, whether it's possible to squeeze out enough funding remains uncertain. Compared with the above option, raising corporate taxes is considered a viable choice for securing stable funding sources.
However, further tax increases may lead to opposition from the business community. Japanese companies are concerned that the additional tax burden will affect wage growth and weaken the international competitiveness of Japanese businesses. Related discussions are expected to be difficult to resolve.
Japan's increase in defense expenditures is largely due to pressure from the United States.
According to a report by the Japanese newspaper Asahi News, cited by Reuters on October 16, despite repeated requests from the Trump administration for Japan to increase defense spending to 3.5% of its GDP, the Japanese government still tends to avoid making explicit commitments when revising the National Security Strategy by the end of this year.
According to reports, the Trump administration has repeatedly called for Japan to raise its defense spending to 3.5% of GDP in closed meetings, stating that this level is a global standard that allies should follow.
But for Japan, accepting this goal means a huge financial burden. According to Asahi Shimbun, if defense spending is increased to 3.5% of GDP, Japan would need to invest over 20 trillion yen annually.
According to reports citing multiple sources from the Japanese government, the Japanese government is currently inclined to significantly increase defense-related expenditures over the next five years, including broader security-related spending.
