Ruling bloc OK’s 12,000 yen cash benefit
Written by Writer on Thursday, November 13th, 2008
Ruling bloc OK’s 12,000 yen cash benefit
The Yomiuri Shimbun
The ruling parties agreed Wednesday on the distribution of a 12,000 yen flat-sum cash benefit per person as part of a government economic stimulus package, but said local governments would decide whether to set an income eligibility cap for the handouts.
Secretaries general and senior members of the Liberal Democratic Party and New Komeito met at a Tokyo hotel Wednesday morning and decided the conditions for the flat-sum cash benefits.
The ruling bloc agreed 12,000 yen would be distributed to each person, with an additional 8,000 yen for those aged 18 or younger and 65 or older.
However, the ruling parties left it up to each local government to decide whether to limit benefit recipients by setting a personal income cap. As an eligibility yardstick, the parties suggested an annual income ceiling of 18 million yen.
Following the ruling bloc agreement, the government plans to submit a second supplementary budget for fiscal 2008 and related bills on fiscal resources to the current extraordinary Diet session or to an ordinary Diet session to be convened in January.
The government and the ruling parties are determined to provide the benefits within this fiscal year. However, the opposition parties are expected to oppose the supplementary budget, making it more likely that Diet deliberations will run into difficulties.
The flat-sum cash benefits would be worth 1.96 trillion yen in total. Surplus reserves in the Fiscal Investment and Loans Program Special Account would be allocated to fund the benefit payments.
Under the benefit program, a couple with two children aged 18 or younger would receive 64,000 yen.
Regarding the distribution method, it is likely that householders will first apply to their local governments with claim forms that will be sent by municipalities to each householder, and then municipalities will transfer the benefits to householders’ bank accounts.
Income is defined as the amount of money after deductions from earnings.
High-income earners, whose income after deductions is 18 million yen or more, would be subject to the income cap, which likely will be set by local governments.
A salaried worker whose income before deductions is 20.74 million yen or above would be subject to the income cap.
However, the government has no intention of enacting a law to stipulate an income cap. As a result, even if an income cap were to be introduced, local governments could only urge high-income earners to voluntarily refrain from applying for the benefit.
To reflect the actual situation of earnings on the income cap system, the estimated amount of income for 2009 will be adopted as the basis for determining a cap.
The ruling parties also decided to give local governments the authority to ask those whose income exceeds the cap to return the benefits if they receive cash.
On Wednesday afternoon, Prime Minister Taro Aso said: “I’ve brought up the necessary aspects that the benefit program should include, such as promptness and fairness. I’m glad the conditions [agreed this morning] basically reflect these factors.”
Asked about how income cap systems would vary in each municipality, Aso said: “I don’t think there’ll be any confusion. There’s no problem with the benefit program’s fairness either.”
At a press conference, LDP Policy Research Council Chairman Kosuke Hori said, “Those who earn more than 20 million yen are subject to a final income tax return, so it might be a good idea to draw a line there [for an income cap].”
Using an annual post-deduction income of 18 million yen as an indication of the lower limit for an income cap, the ruling bloc strongly touted the benefit program, indicating that high-income earners may not receive benefits, and saying the program is intended to provide cash to help people make ends meet.
The ruling bloc decided to give local governments wider discretion on the proposed benefit distribution because some municipalities have voiced concern over the possibility of facing additional administrative burdens due to the central government’s one-sided imposition and that it may disrupt routine office operations.
Akita Mayor Norihisa Satake, who heads the Japan Association of City Mayors, has said, “Municipal assemblies may accept the benefit program if they are given certain discretion on handling methods and periods [for the benefit distribution].”
The agreement on the conditions among the ruling parties seemingly reflects such views of the municipalities.
(Nov. 13, 2008)
