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Cash handouts of ¥10,000 eyed for poor after tax hike

Kyodo

To cushion the impact of the first stage of the consumption tax hike, the government plans to distribute cash payments of ¥10,000 to ¥15,000 to people with low incomes, sources said Wednesday.

Households exempt from the local inhabitant tax will receive ¥10,000 per person, with the cost adding up to ¥240 billion for around 24 million households, sources close to the matter said.

The more than 10 million low-income households who receive pensions or child allowances might get ¥15,000 per person, raising the total cost to nearly ¥300 billion, the sources added.

The government plans to fund the cash-benefit program under an extra budget for fiscal 2013 ending next March to soften the blow from raising the consumption tax hike to 8 percent from 5 percent next April, if approved. The levy is supposed to double to 10 percent in 2015.

Private-sector members of the Council on Economic and Fiscal Policy, the a key government panel, said last week they estimate the 3-point hike would cost households an additional ¥6 trillion ($60.6 billion) in tax payments.

Abe is expected to make his final decision on whether to proceed with the tax hike on Oct. 1.

The Diet passed a law late last year to double the sales tax in two stages to raise money to cover swelling social security costs from the rapidly aging population.

The law provides for the sales tax to be raised to 8 percent next April, and to 10 percent in October 2015.

Abe’s ruling Liberal Democratic Party and its coalition partner New Komeito are considering lowering the tax rate on daily necessities, such as food, after the second hike is carried out to reduce the burden on those with low incomes.

  • japanish

    More badly thought out strategy courtesy of Abenomics. They pushed through the tax hike amid rampant inflation (caused by their economic policies) without a thought to how it would affect the people of Japan. And how will cash payments help lift people out of poverty anyway? It won’t, but they don’t care. They just want to string enough people along while they continue to rob money from the middle class and savers (most of whom are “working poor” at this stage).