Localities face double child pay burden

Kyodo

The administration said Tuesday it wants municipalities to shoulder ¥980 billion worth of monthly stipends to families with children in fiscal 2012, nearly double the previous year’s burden, in a move certain to draw strong opposition from prefectural governors and other local-level bodies.

The central government has already been telling municipalities that an increase in local tax revenues from an elimination of a tax break for dependants, estimated at ¥505 billion for fiscal 2012 if implemented, can cover the raised burden.

To win the municipalities’ approval, Health, Labor and Welfare Minister Yoko Komiyama proposed at a news conference lowering the local burden ratio to 1-to-1.

The proportion of the local government burden was double that of the central government under a more limited child care subsidy program put in place before the Democratic Party of Japan took power.

But because more families have become eligible for the stipends, total spending has surged.

Thus the actual sum to be shouldered by municipalities could be higher.

The central government, already hard-pressed to raise funds for reconstruction following the March disasters while struggling to restore its fiscal health, hopes to reach agreement with the local authorities before the end of the year.

For fiscal 2011, which ends next March 31, local governments will have covered ¥550 billion of the ¥2.61 trillion in universal allowances introduced by the DPJ for children of junior high school age or younger, sticking to the same sum they paid under the previous program while the central government covered all additional amounts.

But starting next April, the central government wants to raise the local-level burden by another ¥440 billion. Its own share is estimated to come to about ¥1.7 trillion.

The ruling party succumbed to pressure from the opposition camp in drastically scaling down the child allowances, which had been its signature policy, to resemble more of the previous subsidy program limited to lower-income families.

But it has yet to complete talks on specifics, including the burden of expenses and the elimination of the tax exemption for dependents.

The DPJ when it came to power in 2009 promised per-child allowances of ¥26,000 monthly, with the initial outlay starting at ¥13,000.