Business

Japan forces through its delayed $1.1tn budget for 2012

Japanese Prime Minister Yoshihiko Noda
Image caption Prime Minister Yoshihiko Noda faces opposition to the sales tax even from within the ruling party

Japan's government has forced through its 2012 budget, after it was stalled by a political battle over plans to double the national sales tax.

The lower house of parliament approved the budget earlier this month.

However, the upper house failed to pass it on Thursday because of intense opposition.

The budget is worth 90.3tn yen ($1.1tn; £689bn), while another 3.7tn yen is set aside for rebuilding from last year's earthquake.

The ruling Democratic Party of Japan (DPJ) submitted a bill to double the country's sales tax to 10% by 2015 late last month.

Opposition parties have been trying to block the budget in the upper house to prevent the government doubling the sales tax.

However, under the constitution, a bill can be enacted 30 days after approval by the more powerful lower house.

The government will issue new bonds worth 44.2tn yen to fund the spending, raising the budget's dependence on debt to 49%.

Tax revenues

The sales tax increase is one of the ways the government is hoping to raise revenue.

Japan's public debt is already twice the size of the $5tn economy.

However, there is still strong opposition even within Prime Minister Yoshihiko Noda's own party and some lawmakers have since left the DPJ in protest.

Because of the dispute over the consumption tax hike, the government was not able to pass the budget before the fiscal year began on 1 April.

Mr Noda then had to draft an interim budget of 3.6tn yen to cover costs for the first six days of this month.

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