Japan’s government and ruling parties agreed Thursday to stop paying “special” child benefits to households with an annual income of ¥12 million or more.
The new rule will apply to benefits to be paid in October 2022 and later.
Under the nation’s child benefit scheme, which covers junior high school and younger children, child-rearing households with annual incomes exceeding certain levels are given ¥5,000 per child per month as special allowances.
Meanwhile, ordinary child benefits are paid to households under a certain income level, with the monthly amount set at ¥15,000 per child aged under 3 and ¥10,000 per older child in principle.
The government and the ruling pair of the Liberal Democratic Party and Komeito also agreed to give up a plan to use the combined incomes of both working parents as a threshold for double-income households to receive child benefits. The government will keep intact the current system in which the higher of the income earned by the husband and that by the wife is used as a threshold.
For the special benefits, the cutoff income levels differ by the number of dependents in a family. A family with a working husband, a stay-at-home wife and two children is eligible for the special allowances if the husband’s pretax income is ¥9.6 million or more.
The move to reduce the special allowances comes as the government is making efforts to reduce the number of children on nursery waiting lists to zero by the end of fiscal 2020 through next March. The number stood at 12,439 across the country as of April 1 this year, making it difficult for the government to reach the target.
It is expected that nursery capacities for an additional 140,000 children will be necessary in fiscal 2021 and later. The government hopes to build new nurseries using the funds to be saved through the end of special child benefit payments to high-income households.
The government initially considered changing the cutoff income level for child benefits for two-income households to the combined incomes of the couples from the current method. But it backtracked in the face of cautious views presented by ruling bloc lawmakers.
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