Japan¡¯s fiscal situation is opaque not only because of the size of its scale, but because the way policy is presented to the public makes it difficult to understand what¡¯s really going on. Today, fiscal transparency matters more than ever ¡ª not simply as a policy goal, but for economic accountability and democratic trust.
Three issues stand out: the widening gap between the initial budget and large supplementary budgets; the limited impact of fiscal measures on household disposable income once social-security burdens are taken into account; and the growing dependence on inflation-driven tax revenues that outwardly improve headline indicators but do not bolster sustainability.
First, supplementary budgets were once reserved for unforeseen needs. Over time ¡ª particularly since the COVID-19 pandemic ¡ª they have become routine and often very large. As a result, the initial budget no longer provides a reliable picture of what government spending and borrowing will look like by the end of the fiscal year.
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