Conflict over child allowance

As the central government’s work to compile the fiscal 2012 budget goes into full swing, conflicts between the central and local governments are deepening over the use and distribution of funds. One such conflict is over funding of the monthly child allowance. Children younger than 3 each will be entitled to ¥15,000 a month and children at primary and middle schools, in principle, each will be entitled to ¥10,000 a month.

In fiscal 2012, ¥2.22 trillion will be needed to pay for the child allowance. Of this amount, the central government demands that local governments shoulder ¥980 billion — about twice the corresponding amount for fiscal 2011. The central government will shoulder ¥1.07 trillion and employers the remaining ¥170 billion.

The central government argues that because the abolition of the deduction on taxable income for parents with minor dependents will increase local governments’ revenues by about ¥500 billion, they should accept the central government’s demand and help provide the allowance.

Although the child allowance must be paid in cash, local governments argue that they should be allowed to use the increased portion in their revenues to improve services for children, such as children’s day care centers. This proposal means that the cash given to children will be reduced somewhat. But in view of the fact that parents and children are suffering from inadequate services for children, the proposed idea will contribute to improving the overall well-being of children. The central government should accept it.

Along with the child allowance, providing grants with no strings attached to local governments was a pillar of the Democratic Party of Japan’s election promises. Although the DPJ administration had decided in December 2010 to provide more than ¥1 trillion as such grants to local governments, the Noda administration decided to reduce the amount for fiscal 2012 to ¥800 billion. There are many subsidies with strings attached. The central government should deprive them of the strings and free them up.

The central government is trying to corner for itself all the increased revenues from the planned raise in the consumption tax. It should end its greed and distribute part of the increased revenues to local governments for use to improve social welfare measures.