As the central government's work to compile the fiscal 2012 budget goes into full swing, conflicts between the central and local governments are deepening over the use and distribution of funds. One such conflict is over funding of the monthly child allowance. Children younger than 3 each will be entitled to ¥15,000 a month and children at primary and middle schools, in principle, each will be entitled to ¥10,000 a month.
In fiscal 2012, ¥2.22 trillion will be needed to pay for the child allowance. Of this amount, the central government demands that local governments shoulder ¥980 billion — about twice the corresponding amount for fiscal 2011. The central government will shoulder ¥1.07 trillion and employers the remaining ¥170 billion.
The central government argues that because the abolition of the deduction on taxable income for parents with minor dependents will increase local governments' revenues by about ¥500 billion, they should accept the central government's demand and help provide the allowance.