Japan plans $70 billion extra budget, tax revenue to exceed forecast: source

TOKYO (Reuters) – Japan’s government will compile a $70 billion extra budget for the fiscal year to next March, including a previously announced economic stimulus package, while revived economic growth is expected to boost tax revenues above initial forecasts, an official involved in the process said on Friday.

The 7 trillion yen ($68.48 billion) supplement to the initial budget for the current fiscal year will fund a spending package of more than 5 trillion yen that Prime Minister Shinzo Abe ordered last month to bolster the economy ahead of an increase in the national sales tax in April.

The extra budget will not force the government to sell more debt, as it will be financed by the windfall tax revenue and other existing resources, the official told Reuters on condition of anonymity.

The government is set to approve the stimulus plan on Thursday of next week and the draft supplementary budget on December 12, the official said.

Japan’s tax revenues, boosted by Abe’s aggressive policies of monetary and fiscal stimulus, are now expected to hit 45.4 trillion yen for this fiscal year, exceeding the forecast in the initial budget by 2.3 trillion yen and marking the fourth annual rise in a row, the official said.

Other sources of revenue for the extra budget include unused portions of a special tax for reconstruction from the 2011 earthquake and tsunami, and savings from lower-than-forecast debt-servicing costs.

(Writing by William Mallard- Editing by Edmund Klamann)