JIJI – The April consumption tax hike to 8 percent is expected to bring in an additional ¥5 trillion in tax revenue in fiscal 2014, but the government can use only ¥500 billion to improve social welfare.
Japan will spend all ¥5 trillion in extra revenue for the fiscal year, which starts that month, on social welfare, but much has to be allocated for contributions to basic pension costs.
Reform plans for social security and the tax system, based on a two-stage hike in the consumption tax to 10 percent, call for spending revenue from a 4-percentage-point hike in the tax, or ¥11.2 trillion, to stabilize social welfare, including financial sources for public pensions, and that from a 1-point hike, or ¥2.8 trillion, to improve welfare.
Of the ¥2.8 trillion, some ¥700 billion will be earmarked for assistance for children and child-rearing families, including steps to cut the number of children waiting to enter nursery schools.
In medical and nursing care fields, the government will use ¥1.5 trillion to prepare a system that enables people to receive necessary services close to home. Some ¥600 billion will be utilized to prop up the pension system, such as starting pension payments to single-father families.
Health, Labor and Welfare Minister Norihisa Tamura said his ministry hopes to steadily promote welfare improvement measures in a bid to assure the public that the consumption tax hike will lead to better and more stable social welfare.
The content of the improvement measures will be the key to whether the government can win public support for the tax hike, Tamura said.
In fiscal 2014, however, the first priority is to stabilize the welfare system as the revenue jump from the tax hike is limited to ¥5 trillion. As a result of pouring ¥2.95 trillion into government contributions to basic pension costs, the amount that can be allocated to improve measures is limited to some 10 percent of the total tax revenue increase.