Japan’s Annual Budget Bill Passes the Lower House

Japan’s Annual Budget Bill Passes the Lower House

By Takuya Nishimura, Senior Fellow,  Asia Policy Point
Former editorial writer for the Hokkaido Shimbun
You can find his blog, J Update here.
March 16, 2026
 
The Lower House passed the FY2026 budget bill and sent it to the Upper House on March 13. To prove that her decision to dissolve the Diet and to hold a Lower House snap election in February did not interfere with work on the national budget, Prime Minister Sanae Takaichi needs the Diet to approve the budget by the end of March.  She has pushed the leading parties – the Liberal Democratic Party (LDP) and the Japan Innovation Party (JIP) – hard to accelerate the budget process. With the LDP’s supermajority, the bill cleared the Lower House with extraordinary speed on March 13. It is still unclear, however, whether the Upper House will act by the end of March, as the prime minister hopes.
 
The Diet’s process for considering the annual budget bill ordinarily takes two months or more. The dissolution of the Diet and the ensuing campaign set back work on the FY2026 budget by a least a month. Takaichi has attempted to accelerate the process and pass the FY2026 budget bill inside of a month. The government should have an approved budget in place before the fiscal year begins on April 1. Hence Takaichi’s self-imposed March 31 deadline. It is a hard deadline even though Takaichi gave a month away last January.   
 
The first step in the annual budget process is for the administration to submit a budget bill to the Lower House, as Article 60 of the Constitution of Japan requires. The Committee on the Budget of the House then begins its review. For the first three days, senior members of each party put questions to the prime minister. After that, rank-and-file members discuss the budget in greater detail; the premier may or may not be present at these sessions. On the theory that the budget is related to every political issue, the questions range widely, extending even to the scandals of the leading parties.
 
This year the Takaichi Cabinet submitted the FY2026 budget bill to the Lower House on February 20. The House’s Committee on the Budget commenced discussions on February 27. The three days for questions from the senior members were February 27, March 2 and 3. The opposition parties agreed on this schedule proposed by the leading parties.
 
However, the rest of the schedule was at the discretion of the chairman of the committee, Tetsushi Sakamoto, an LDP member, including the decision to end debate and bring the bill to a vote. He decided that the committee would hear from each ministry on its policies on the budget bill from March 4 to 6. The committee then had a local public hearing on March 8 and a public hearing in the Diet on March 10.  Sakamoto unilaterally set these dates only with the approval of the leading parties, dismissing requests from opposition parties for further reviews on the budget bill.
 
All parties had agreed to include in the agenda time for discussion of such important issues as Japan’s response to the war in Iran and price inflation for two days, but Sakamoto alone later decided to end the budget discussion on March 13, a decision that the leading parties endorsed. As a result, the committee spent only 59 hours reviewing the bill, the shortest period in the last twenty years. The Lower House budget committee usually spends about 80 hours on the annual budget bill.
 
Behind Sakamoto’s use of his prerogative to limit discussion in the committee was pressure from Takaichi. Before discussion of the bill began, the LDP had set a deadline of March 13 for the vote in the Lower House. Takaichi figured that the LDP’s supermajority would make this timing work.
 
Furthermore, she wanted to minimize her time in front of the committee. She tends to make inappropriate remarks in the Diet. Quite unnecessarily, she said in last fall’s Diet session that the “Taiwan contingency” might trigger Japan’s right to use force. In this year’s session, she said that imperial succession would be limited to male offspring in the male line, misquoting an experts’ report. Sakamoto limited the time for her remarks in the committee and let other ministers answer questions from opposition parties.
 
At the hearing, the Prime Minister did not look healthy. She wore a glove on her right hand reportedly to lessen arthritis and a blanket covered her lap. Takaichi also seemed unable to stand and had cancelled a meeting with Islamic delegation in the evening of March 12.  The prime minister’s official residence explained that she had a cold. It is usual that the staff conceal true information about prime minister’s health. There is no information, so far, of cancelling her upcoming March 19 visit to the U.S. for a summit meeting with President Donald Trump.
 
Upset about the chairman’s inordinately speedy scheduling of the budget process, the opposition parties submitted to the House a no-confidence resolution against Sakamoto. It was easily dismissed with a majority vote of the leading parties. The budget committee with its majority of LDP and JIP members approved the budget bill on March 13, as scheduled, and it passed the House with an overwhelming majority in the Lower House’s Plenary Sittings later in the day.
 
“We protest the speed of the discussion process. It marks an embarrassing history for future generations,” said the leader of Centrist Reform Alliance (CRA), Jun-ya Ogawa. The leader of Democratic Party for the People (DPP), Yuichiro Tamaki, criticized the budget bill as insufficient to help households. But they are in opposition and cannot control a vote in the Lower House.
 
The LDP and the JIP do not have a majority in the Upper House. For Takaichi to save face, the budget bill needs to pass the Upper House by the end of March. The bill will automatically be approved on April 12, even if the Upper House votes against it. The leading coalition needs only four additional votes to gain a majority vote in the Upper House.
 
Takaichi is lucky that the opposition parties are not sufficiently united to block the bill. They take different stances on the Takaichi administration. For example, the DPP has decided to join Takaichi’s National Council on Social Security, accepting Takaichi’s invitation, but the CRA still hesitates. Some opposition parties are concerned about public criticism for any delay in passing the annual budget bill, which includes economic stimulus measures. The struggle between the parties in the Upper House will intensify through the end of this month.

Takaichi Getting Down to Business

Takaichi Goes for the Consumption Tax Cut

By Takuya Nishimura, Senior Fellow, Asia Policy Point
Former editorial writer for the Hokkaido Shimbun
You can find his blog, J Update here.
March 2, 2026
 
Prime Minister Sanae Takaichi has, not surprisingly, interpreted the sweeping victory by the Liberal Democratic Party (LDP) in the February 8 Lower House election as a green light from voters to pursue her policy agenda. Most recently, she announced in the Diet debate on February 27 her intention to submit a bill for a two-year moratorium on the consumption tax on food. Certain opposition parties remain skeptical about the process for discussion through a nonpartisan “national council,” even though they are not completely opposed to the idea of a consumption tax cut. Still, the first half of this Diet session is likely to focus on the consumption tax cut.
 
The Diet held three days questioning Takaichi in Plenary Sittings of both chambers between February 24 and 26. Unlike the other opposition parties, the leaders of the Centrist Reform Alliance (CRA), Jun-ya Ogawa, and the Democratic Party for the People (DPP), Yuichiro Tamaki, called on Takaichi to discuss the consumption tax cut in the Diet and not in a national council.
 
What exactly is the “national council”? In her policy speech to the Diet in October 2025, Takaichi proposed establishing a national council to discuss comprehensive reform of the social security and taxation systems. The council’s work would include designing a system for “tax credits with benefits.” She hoped the council would be a nonpartisan discussion body. Takaichi had to get approval from the opposition parties for her agenda, because her government was in a minority at the time.
 
On January 26, the day before the official announcement calling for the Lower House election, Takaichi expected the national council to include the consumption tax cut in its agenda. Although she had originally opposed a consumption tax cut, Takaichi suddenly changed her mind when the opposition parties included it in their platforms. After the Lower House election, Takaichi said that the ultimate goal for the council would be tax credits with benefits. A temporary moratorium of the consumption tax on food would be a provisional measure before the council introduced the broader tax-with-benefits framework.
 
The CRA and DPP are basically supportive of the tax credit with benefits. However, the consumption tax cut is more important to these two parties. The CRA included the permanent elimination of the consumption tax on foods in their election platform. The DPP took a slightly different tack and argued in the campaign that the consumption tax rate should be reduced from 10 percent to 5 until the rate of wage hike steadily exceeds the price inflation rate.
 
Given their skepticism about a nonpartisan forum rather than debate directly in the Diet, the CRA and the DPP refused Takaichi’s invitation to the first meeting of the National Council on Social Security that was convened on February 26. They were concerned that Takaichi would attribute a failure to introduce a consumption tax cut on food to the opposition parties if the discussion in the council fell into confusion. The two parties know even some LDP members are negative on a consumption tax cut.
 
The national council thus embarked on its work without the participation of the two major opposition parties. Takaichi did not invite the Japan Communist Party, Reiwa Shinsengumi, and Sanseito because she believed their views were inimical to the idea of tax credits with benefits. As a result, the “national council” is essentially partisan: its members are only the LDP, its coalition partner, the Japan Innovation Party, and one small opposition party, Team Mirai.
 
Takaichi has not, however, abandoned having the opposition parties join in the introduction of a consumption tax cut. Takaichi took one step forward in a discussion in the Committee on Budget of the Lower House on February 27. She said she would submit a bill for a two-year elimination of the consumption tax on food at an extraordinary session of the Diet this coming fall. She also revealed a new idea of a flexible application of the consumption tax in the event of a major natural disaster or the outbreak of an infectious disease.
 
Takaichi shows herself to be careful to listen to the opposition parties on the consumption tax cut, notwithstanding the LDP’s supermajority in the Lower House. Her party does not have a majority in the Upper House. Pushing her agenda in the Lower House could result in protests from the opposition powers in the Upper House – which would waste time in the legislative process.
 
On other issues, Takaichi is acting on her own conservative agenda. In the budget committee discussions, she pushed for limiting imperial succession to male offspring in the male line. She also rejected any role for the Diet in reviewing the export of weapons to foreign countries after abolition of the five-category regulations. Her view is that the export policy decision should be left solely to the prime minister and her administration.
 
In the Diet discussions, the opposition parties also questioned Takaichi’s distribution of 30,000-yen gifts on catalogue to the LDP winners in Lower House election. Although former prime minister Shigeru Ishiba apologized for similar gifts he made to some winners in the 2025 Upper House election, Takaichi refused to do so, arguing that her gifts violated no law. Takaichi does not look vulnerable to a money scandal – so far.