Making education free of charge was a key campaign promise of Prime Minister Shinzo Abe's ruling coalition in last month's election. Abe floated the idea of diverting some of the increased revenue from the next consumption tax hike in 2019 to help cut the household burden of education costs. Questions persist, however, as the government and Liberal Democratic Party try to work out concrete details, including doubts over providing free preschool education for children irrespective of parents' income. A decision should not be rushed. Whether the proposed measures are truly necessary or fiscally reasonable must be weighed.
The Abe administration aims to spend ¥2 trillion — ¥1.7 trillion for free preschool education and reducing the financial burden for families whose children go on to higher education, along with ¥300 billion to increase the number of nursery schools. The government plans to secure ¥1.7 trillion of that total by using revenue from the tax hike originally intended to pay down the government debt incurred to cover social security costs. It seeks to set aside the remaining ¥300 billion by having firms contribute funds in the form of increased contributions to social insurance programs.
While the plan is touted as a key pillar of the administration's agenda for developing human resources, it entails deferring the cost of government debt to future generations. While Keidanren has indicated its support for contributions from the business sector, small and medium-size firms are reportedly unhappy.