The government and the ruling coalition are considering an emergency economic package worth more than ¥30 trillion ($270 billion) to offset the impact of the coronavirus outbreak, sources close to the matter said.
The sum includes spending by the private sector, the sources said Sunday.
Spending by the government is likely to surpass ¥15 trillion, which is what it spent on the economic package hammered out during the 2008 global financial crisis sparked by the implosion of the U.S. housing market.
The package could involve issuing cash and gift certificates to the public, and even subsidizing travel expenses, they said.
It would also facilitate financing for small and midsize companies so they can stay in business and maintain employment.
“We must consider a size far exceeding the level at the time of the Lehman crisis,” Liberal Democratic Party policy chief Fumio Kishida said on an NHK debate program Sunday, referring to one of two major U.S. investment banks that collapsed at the peak of the crisis.
In April 2009, Japan released an economic stimulus package featuring ¥15.4 trillion in state funding in response to the global financial crisis.
“We need more drastic measures,” Kishida said, proposing cash handouts and other steps that can directly reach households.
Noritoshi Ishida, the policy chief at Komeito, the LDP’s coalition partner, said it is best to distribute a fixed amount without setting an income limit for eligibility.
The opposition camp fired back with bigger proposals.
Seiji Osaka of the Constitutional Democratic Party of Japan and Kenta Izumi of the Democratic Party for the People pushed for a stimulus package worth ¥50 trillion.
Izumi and Japanese Communist Party policy chief Tomoko Tamura meanwhile called for halving the consumption tax to 5 percent.
Kishida said the tax proposal could backfire because consumers might delay purchases until after the tax is reduced. He also said it would be costly for companies to revise their computer and other systems.
Nippon Ishin no Kai policy chief Hitoshi Asada said lowering the tax doesn’t look like an appropriate step right now because consumers are refraining from going out or socializing.
On a different TV program, LDP tax panel leader Akira Amari said a tax moratorium should be considered for small businesses.
On the cash handouts, he said the payments of ¥12,000 to ¥20,000 per person being proposed by some officials doesn’t go far enough to help.
The government and the ruling coalition are considering deficit-covering bonds as a source of funding for the package, which they plan to finalize as early as April, according to the sources.
The two sides are expected to start substantial negotiations on the package after the Diet passes the initial budget for fiscal 2020 later this month.The government and the ruling coalition are unlikely to reduce the consumption tax because tax revenues are a major source of funding for social security spending at a time when the population is rapidly graying.