The government and the ruling Liberal Democratic Party are considering refunding 4 trillion yen in workers’ accident compensation insurance premiums paid by companies, LDP officials said Wednesday.
The measure will help alleviate companies’ financial burdens and represents a “virtual tax rebate,” the officials said.
They said it may be included in a package of steps to fight deflation to be adopted later this month.
Because the government has ample funds built up with the insurance premiums, it could refund part of the fund to companies without resorting to bond issues.
This will allow the government to stick to Prime Minister Junichiro Koizumi’s pledge to cap the issuance of new government bonds at 30 trillion yen a year.
Senior LDP lawmakers, such as General Council Chairman Mitsuo Horiuchi, floated the idea and have already recommended it to Koizumi. The prime minister told concerned government officials to work on the plan.
But the idea could encounter opposition from the Health, Labor and Welfare Ministry, which oversees the system of workers’ compensation insurance for job-related accidents.
Under the system, companies are required to pay insurance premiums into the fund. As of the end of fiscal 2001, the fund stood at 7.4 trillion yen, about 7.5 times the average annual insurance benefit payments.
The government and the LDP are considering changing the related laws so the government could refund premiums paid since fiscal 1999, the sources said. The refund would be treated as tax-free.
According to data on the labor insurance special account, annual revenues from workers’ accident compensation insurance premiums have ranged from 1.28 trillion yen to 1.55 trillion yen for the past six years, while expenditures have ranged from 1.23 trillion yen to 1.32 trillion yen.
Of the annual expenditures, 950 billion yen to 980 billion yen are appropriated for insurance benefit payments. Thus, the government may even cut the rate of insurance premiums, the sources said.