From April the government is considering scaling down the tax exemption for money gifted to cover child care and education costs, people familiar with the matter said Saturday.
The number of people applying for the exemption has steadily declined since the program was introduced in 2013, and there has been criticism the tax break benefits tend to be greater for wealthier families, they said.
Since 2013, grandparents can give up to ¥15 million in a lump sum to each grandchild free of tax to pay for education expenses.
Aiming to promote the transfer of assets from retirees and others to younger generations to spur consumption, the government expanded the program in 2015 to allow a tax-exempt gift of up to ¥10 million to children and grandchildren for expenses related to giving birth and child care.
If the government decides to lower the upper limit for each sort of gift or introduce an income cap, the change will be included in the annual tax system review and take effect in April, the sources said.
In fiscal 2017, the number of tax exemption applications for education gifting was about 15,000, down 77 percent from fiscal 2013 when the program was introduced, according to the sources.
As for child care donations, the number dropped 95 percent from fiscal 2015 to 207.