Public Finance Law

In Japan, the Public Finance Law of 1947 established the framework for government budgeting. The Cabinet is responsible for preparing the national budget, which must be approved by the Diet. Taxes can only be levied or altered through laws passed by the Diet. The Ministry of Finance's budget division oversees the preparation of the budget on a fiscal-year basis. The core of this system is the general account, which covers all revenue and expenditure directly related to the government's overall fiscal operations. Additionally, special accounts exist for government enterprises and other specific financial activities, though these have sometimes required government intervention to cover deficits. The law mandates that the general account must be balanced or in surplus, and any increase in net long-term debt requires special legislation tied to specific investment uses.1