The House of Representatives approved a bill Thursday that will extend eligibility for an allowance for dependent preschool children to parents of those aged 3 years or older, assuming income criteria are met.
The bill, part of the government’s efforts to encourage people to have children as the national birth rate continues to slide, cleared the Lower House with the support of the ruling coalition, comprising the Liberal Democratic Party, New Komeito and the New Conservative Party.
It is expected to pass the House of Councilors by mid-May and go into effect in June.
As a result, the number of children eligible to receive the allowance will more than double to 5.64 million from the current 2.65 million.
Only parents of children under the age of 3 currently qualify for the allowance.
The monthly payment will remain the same as at present — 5,000 yen for the first and second child and 10,000 yen for the third and each additional child.
Existing limits on annual household incomes used to determine eligibility for the payment will also be maintained. They are 4.325 million yen for a self-employed person with a dependent spouse and two children, or 6.7 million yen for an employee with the same combination of dependents.
Extending the eligibility, which will cost an extra 220 billion yen annually, will be covered by cutting tax deductions available to households with children aged under 16.
The new allowance system will effectively raise taxes for households with children of at least elementary school age and households with combined incomes over the limits.
However, households with incomes within the limits stand to benefit, even after reduced tax deductions are taken into account.