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Following criticism from local leaders, Prime Minister Fumio Kishida’s administration will allow local governments to pay out all of the ¥100,000 handouts earmarked for children up to 18 years of age in cash instead of distributing half in coupons.

Original plans, announced as part of the government’s economic stimulus package, called for distribution of ¥50,000 in cash by the end of this year, followed by distribution of another ¥50,000 in coupons next spring when the new school year starts. Only those aged 18 or younger in households with annual incomes of ¥9.6 million or less are eligible.

The first handout is aimed at supporting those in need and the second handout is focused on assisting child rearing households and boosting consumption.

The Kishida government had to make a shift in one of its key economic policies, as local leaders and opposition parties pointed to increased costs and logistical concerns about the coupon payouts.

“We will proceed with the design of a flexible system while listening to the opinions of local governments,” Kishida said Thursday in response to questions in parliament about the system.

On Friday, the government said local governments that could not begin distribution of ¥50,000 in coupons by the end of June next year would be permitted to provide cash instead.

Criticism of the coupon distribution plan first emerged late last month after it was revealed that while administrative costs for handing out ¥50,000 each in cash would be some ¥30 billion, the necessary expenses for handing out the same amount in the form of coupons would be ¥96.7 billion.

Ichiro Matsui, Osaka mayor and head of Nippon Ishin no Kai, on Dec. 1 said the handouts should be made completely in cash.

“Coupons need a great amount of time and costs to prepare, and are not realistic,” Matsui said.

Many municipalities, including the city of Minoo, in Osaka Prefecture and Akitakata, in Hiroshima Prefecture, as well as several cities in Gunma Prefecture, are following suit. The city of Ono, Hyogo Prefecture, and the town of Misaki in Osaka, intend to do so as well, and even abolish the income limit.

Despite increasing calls from local governments for cash handouts, the plan for coupon distribution remains, as the government has said it will ask municipalities to submit a document explaining the reasons for not distributing coupons.

Plans are proceeding for the first half of the payouts. On Friday, economic revitalization minister Daishiro Yamagiwa told reporters that 90% of local governments would begin distributing the payments to those aged 15 or younger, whose needs are being prioritized, by the end of the year.

Information from Kyodo added

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