Japan’s Government Considers $33 Billion Package to Support Low-Income Households
Japan’s government is considering spending around $33 billion for payments to low-income households and an income tax cut as part of a package of measures to lessen the hit from rising living costs on households, three government officials told Reuters Wednesday.
Income Tax Cut and Residential Tax Cut
The spending, currently estimated at around 5 trillion yen ($33.37 billion), will include a blanket, one-off income tax cut worth 30,000 per person and residential tax cut worth 10,000 yen respectively, which will be implemented in June 2024, a draft of the plan obtained by Reuters showed.
Payouts to Low-Income Households
The spending plan, to be formally decided by Prime Minister Fumio Kishida’s cabinet on Nov. 2, also features payouts to low-income households, the officials said, confirming a report by the Nikkei newspaper.
Discussion on Tax Cuts
Details on tax cuts will be discussed by the ruling party’s influential tax panel toward the year’s end, said the officials, who spoke on condition of anonymity as they were not authorized to speak publicly.
Prime Minister’s Comment
Deputy Chief Cabinet Secretary Hideki Murai told reporters he was aware of the prime minister’s comment in a TV appearance late on Tuesday that he wanted to achieve wage hikes that offset price increases next year.
Tax revenue has grown this year, and Murai said the prime minister wanted to find a way to return some of that to the public to support households.
“The prime minister will give formal and specific instruction at a meeting tomorrow between government officials and the ruling bloc, which will shape up through the ruling party’s tax panel debate,” Murai said.
Inflation and Solid Economic Growth
Inflation, fueled by rising costs of raw materials, has kept above the central bank’s target of 2% for more than a year, weighing on consumption and clouding the outlook for an economy making a delayed recovery from COVID-19 scars.
With wage rises proving too slow to offset the price increase, Kishida has announced a plan to ease the pain by returning to households some of the expected increase in tax revenues generated by solid economic growth.
Kishida is due to discuss wage hikes, among other issues, with auto industry officials when he visits the Japan Mobility Show on Thursday, Murai said.
