The government is considering child benefit cuts for high-income households from fiscal 2021, with the idea of using the savings to increase the capacity of child care services and reduce the number of children on nursery school waiting lists.
The government is examining the idea of reducing a special allowance for high-income households with children in junior high school or younger to ¥2,500 per month from ¥5,000.
The government is also considering changing the way it calculates the incomes of recipient households and scrapping the special allowance entirely for families with especially high incomes.
Under the child allowance program, households with incomes under a certain level receive a regular benefit of ¥15,000 per month per child if they have children under 3 and ¥10,000 in principle if their children are aged 3 or higher.
Households exceeding a certain income level are eligible for the special allowance, which stands at ¥5,000 regardless of whether their children are under 3 or not.
The cutoff income levels differ by the number of dependents in a family. A household with one working parent and two children is eligible for the special allowance if the parent’s pretax income is ¥9.6 million or more.
At present, the government uses the higher income in families in which both parents work in order to decide whether to grant the regular or special benefit.
Under the new rule being examined, the government would add up the parents’ incomes instead.
The government is considering halving the special allowance to ¥2,500 if households earn more than a certain level based on the new method of calculation and scrapping the allowance altogether if they are especially high earners.
The cutoff income levels will be decided before the government compiles a draft budget toward year-end.
The government is struggling to hit a target of lowering the number of kids on nursery school waiting lists to zero by the end of fiscal 2020 through next March. As of April 1 this year, the number stood at 12,439.
It is forecast that an additional 140,000 children will be in need of care services from fiscal 2021, so the government hopes to expand the capacity of such services.
However, the possible benefit cuts are expected to trigger a backlash from two-income households. The government is considering the idea very carefully, sources said.
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