JAPAN TIMES



 

The government and ruling bloc will aim to enact during the ongoing parliamentary session a fiscal 2022 supplementary budget and offer a cash handout program for low-income families with children, as part of efforts to shore up the economy, ruling party officials said Thursday.

The government plans to tap reserves in its fiscal 2022 budget to finance an emergency package of economic measures and replenish the reserves under the extra budget, which is likely to be about ¥2.5 trillion, the officials said.

The ruling Liberal Democratic Party and Komeito, the LDP’s junior coalition partner, had remained split over how the package should be financed.

The LDP wanted the package to be financed by reserves, while Komeito demanded that a supplementary budget be compiled to fund specific policy measures.

The government aims to draw up the economic package on Friday, and Prime Minister Fumio Kishida will announce it as early as next Tuesday.

Under the package, the government is considering a cash handout program of ¥50,000 ($390) per child for low-income households to cushion the impact from rising prices caused by Russia’s invasion of Ukraine, sources said earlier.

The package would also include more subsidies for oil wholesalers to bring down retail gasoline prices, and financial assistance to struggling smaller firms and to livestock farmers hit by higher feed costs as the war in Ukraine has sent grain prices surging, the sources said.

The government is weighing expanding the already implemented ¥100,000 cash handout program for struggling households that have been exempt from residential tax payments due to low income since this month.

The ¥50,000 cash handout program, likely using about ¥200 billion in the reserve funds, is designed to support each child age 18 and younger from a single-parent family or a household that has been exempt from residential taxes due to low income, according to the sources.

The measures are meant to address growing concern about the negative impact of rising energy and food prices on households at a time of an anemic economic recovery from the COVID-19 pandemic.

The yen’s sharp fall has also aggravated the pain for resource-poor Japan as a weak yen inflates import costs.

To mitigate the impact of higher fuel costs that threaten to cool consumer sentiment, the government is planning to raise the amount of subsidies for oil wholesalers from the current ¥25 per liter, the sources said.

The cash handout plan, although limited in scope, could still be taken by critics and opposition lawmakers, as a cash splurge ahead of the House of Councilors election, expected in July.

An earlier idea in the ruling coalition to give cash handouts to older people hit by a fall in public pension benefits was scrapped in the face of similar criticism.

The government and the LDP-Komeito coalition are leaning toward the view they can gain public support as long as the target of cash handouts is limited to struggling households and child-rearing families, the sources said.