Japan to Pay Part of Income-Linked Benefits in April 2029

Tokyo, Sept. 6 (Jiji Press)–The Japanese government is considering making part of payments under a planned income-linked benefit program in April 2029, it was learned Sunday. The financial aid program is planned to be introduced in earnest in fiscal 2029, and the portion that may be paid in April 2029 would be part of the benefits for the fiscal year starting that month. The move is intended to mitigate the financial burden on households after the consumption tax rate for food, which is planned to be cut to 1 pct from 8 pct for two years from fiscal 2027 as a stopgap measure until the full-fledged start of the benefit program, is brought back to the original rate in April 2029, informed sources said. The government plans to pay the rest of the fiscal 2029 benefits around September 2029, according to the sources. If local governments agree to the two-staged payment plan involving greater burden concerning related administrative work, the central government and the ruling coalition will reflect this in a tax system reform package on the consumption tax cut that is expected to be drawn up shortly, the sources said. Last month, the government decided to introduce the full-scale benefit program, which would cover low- and middle-income workers, in fiscal 2029, after the end of the two-year consumption tax reduction. The government expects that the benefits would normally be paid around September every year, after the completion of work to figure out how much recipients earned in the preceding year. For fiscal 2029, however, households’ burden could be heavy if they have to wait until around September to receive the benefits following the food tax rate’s return to 8 pct, prompting the government to consider moving up the distribution of part of the aid, according to the sources. Some in both the ruling and opposition camps are concerned that the government may face difficulties restoring the tax rate to 8 pct depending on the economic situation and public opinion. On this, Prime Minister Sanae Takaichi has vowed to bring back the tax rate to 8 pct after two years with her responsibility. She also argued that the effects of the benefit program would be greater than those of the consumption tax cut. Still, details of the program, including the amounts of benefits and income thresholds, have yet to be decided. The government is also considering financial aid for low-income people who would not be covered by the benefit program. In addition, it is mulling putting a simplified benefit plan in place during the two years in which the tax rate is cut to 1 pct in order to effectively reduce the food consumption tax to zero. However, the government has yet to find necessary financial resources, despite concerns among financial market players over the Takaichi administration’s expansionary fiscal policy. END [Copyright The Jiji Press, Ltd.]