After a sinuous course, the ruling Liberal Democratic Party and Komeito have reached a decision on cash benefits to be given to households as part of the government's economic stimulus package. The decision itself contains problems. It could confuse municipalities that will distribute the money. Moreover, it is unclear whether the ¥2 trillion cash giveaway from the government will actually stimulate the economy.
In late August, the government under then Prime Minister Yasuo Fukuda decided to carry out a fixed-amount income tax reduction at the insistence of Komeito. When Prime Minister Taro Aso announced the ¥26.9 trillion stimulus package Oct. 30, he said the government would distribute the cash benefits to all households. But people within the government and the ruling coalition argued that high-income households should be excluded.
The ruling coalition eventually decided to distribute ¥12,000 per person in principle while an extra ¥8,000 will be given for each person 65 or older or 18 or younger. But it has left to municipal governments the important decision on whether to set a limit on personal income when deciding eligibility for the cash benefits. The coalition decided that municipal governments could ask people earning ¥18 million or more after deductions to voluntarily refuse the cash benefits.