DPJ gives in to opposition pressure on child allowance policy

TOKYO —

The ruling Democratic Party of Japan said Friday it had agreed with the opposition Liberal Democratic and New Komeito parties’ request on the child allowance policy.

The two sides forged an agreement on Thursday night whereby the government will revert to the essence of the child allowance plan used by the LDP before the DPJ came to power in 2009. 

The compromise follows on from a DPJ concession last year in which then Prime Minister Naoto Kan had decided to give up on the DPJ’s policy of providing benefits to children of junior high school age or younger.

Under the new plan, the monthly allowance for a child under the age of 3 will be increased in fiscal 2012 to 15,000 yen from the current 13,000 yen. The annual cost of providing allowances will decrease to about 2.3 trillion yen from the current 2.7 trillion yen, by reducing the allowance for children from the age of 3 through middle-school age to 10,000 yen a month from the current 13,000 yen.

The child-allowance issue has been fraught with difficulties and has provoked disagreement between the parties, with each proposing minor revisions concerning the income level of recipients and welfare amounts to be given.

Agreement has been hard to come by since the LDP and Komeito backed a return to the old system. The DPJ, however, had made child welfare reform a central plank of its manifesto, which has led to strong resistance within the party to reforming the system. 

The bill is expected to be submitted to the Diet before the end of this month.

Japan Today

  • 0

    Speed

    I really wished they would've kept the higher amount.

    In fact, I wish they had raised it to their original promise of 2,600 (?) yen a month.

    It costs an arm and a leg to raise kids here. The new amount will help pay for only about half of my kids nursery school fees every month.

  • -2

    Herve Nmn L'Eisa

    Why should there be any subsidy for children?? Raising children is a parental decision and a parental responsibility. Enough with the social program handouts as they only discourage personal responsibility and contribute to national insolvency, as well as entrap the recipients in dependency on the dole. Going the way of the Romans, fiscal demise.

  • 2

    Kabukilover

    Why should there by any subsidy for children? Because children are future workers who will help maintain Japanese society. That's why. Unfortunately, having children is expensive. Many Japanese are not having children for this reason. That means a lot of future corporate warriors, government workers, mechanics, nurses, teachers and (don't forget) journalists are not being born. To reverse that trend Japanese need incentives. I do not mean that they should be told that children are warm and cuddly. They need to see guarantees of financial help and social safety nets. It is a pity that the Noda administration caved into the LDP on the matter of child allowances. This is one more not small disincentive not to have children.

  • 0

    cleo

    All this chopping and changing defeats the whole purpose of the exercise. If people cannot be confident of the allowance being in place in years to come, they aren't going to factor it into their thinking over whether to have a(n other) child, which means it does not work as a measure to raise the birth rate - it's just a temporary windfall for people for whom the extra cash is not an important factor, and a drain on the taxes the rest of us pay in.

    The permanent ¥26,000 (actual sum doesn't really matter) allowance the DPJ originally proposed was a good idea. 3/11 meant that priorities changed. The LDP is trying to feed off the weakened fiscal body that is post-3/11 Japan like a hyena feeds off carrion. I wish they would just go away and fester somewhere dark and wet, instead of trying to suck the life blood out of the nation.

  • 1

    plasticmonkey

    The govt has from this year cut the ¥380,000 tax deduction for child dependents in order to help pay for this child allowance system. If it ever cuts the child allowance payouts, I hope it brings back the tax deduction. But I wouldn't be surprised if the govt doesn't.

    Personally, I think having a bigger tax deduction for dependents is a more efficient way to go.

  • 0

    warnerbro

    "the government will revert to the essence of the child allowance plan used by the LDP before the DPJ came to power in 2009. "

    This comes as no surprise. The DPJ has almost since the instant it gained the Prime Minister's chair reversed itself on almost everything that differentiated it from the LDP. They have done nothing but capitulate when faced with bureaucratic resistance. Such is Japan's "democracy." People can vote for who they like, but the people in charge do not change.

  • -2

    It"S ME

    Looks like they are currently arguing more on how to the name the new child raising allowance. Watching as I am recipient and the amount won't change just the name(which means filling in forms).

  • 0

    LFRAgain

    This child allowance is utterly meaningless and every one of these politicians desperately needs to be slapped in the back of the head for having the audacity to to pitch this at the electorate as any sort of "compromise." A compromise for whom, exactly?

    As Plasticmonkey pointed out, the standard child tax deduction of 380,000 yen was phased out. I've stated before than I'm no mathematician, but even at the previously proposed allowance of 26,000 yen per month, it seems pretty clear that the child allowance con't have possibly made up for the sudden loss of the child tax deduction.

    Now under this new asinine proposal, the 10,000-yen monthly child allowance won't come even close to making up the shortfall. In essense, these politicians' efforts to help ease the costs of raising a child in a nation with negative population growth have resulted in the polar opposite.

    And just as Plasticmonkey pondered, I'd be willing to bet my child's monthly allowance that even after thus so-called compromise, no one in the government will lift a finger to bring back the old child tax deduction, either in whole or in part.

  • 2

    cleo

    even at the previously proposed allowance of 26,000 yen per month, it seems pretty clear that the child allowance con't have possibly made up for the sudden loss of the child tax deduction.

    ¥26,000 per month in child allowance would work out at ¥312,000 per year. That's ¥312,000 cash in the wallet.

    The child tax deduction of ¥380,000 per year didn't mean ¥380,000 cash; it was simply that that amount of money was deducted from the taxable portion of your salary. For a person on the lowest income tax rate of 5%, it meant ¥19,000 per year less tax, or less than one month's worth of the original ¥26,000 child allowance. For a person on the top rate of 40%, it meant ¥152,000 per year less tax, or a little under 6 month's worth of the child allowance. So it seems pretty clear that the child allowance more than made up for any loss in tax deductions, especially for the lower-paid.

    Calculating on the new figure of ¥10,000 per month, those paying the lowest rate of tax are still quids in, while those on the highest rate are ¥32,000 a year out of pocket; but on a taxable income of ¥18 million, it's hardly a hardship. Basically anyone with a taxable income of ¥9 million or less is better off without the tax deduction and with the child allowance.

  • 0

    Hikozaemon

    The allowance was devised by the LDP as a way to pay another economic stimulus out while being seen to be doing something about the issues facing young families struggling to raise kids, or deciding against kids for how difficult it is becoming.

    The allowance is a cop out by both parties.

    Instead of innovating policies to better address the need for mothers to work while raising children, all the DPJ could come up with for it's manifesto was increasing the brbe and extending it to the rich who don't need

  • 0

    Hikozaemon

    I'd like to see the allowance abandoned and the budget for it allocated to more meaningful structural changes - like mandatory provision of daycare by large companies, changes to the employment contracts law that has created a huge class of working poor, support funding for local governments to provide free healthcare for kids, starting with Fukushima. The allowance was a sham to begin with, even though the DPJs inability to protect it is another sign of their complete betrayal of the promise to bring democratic choice and accountability into Japanese lawmaking for the first time.

    Complete sellouts ...

  • 1

    LFRAgain

    Cleo,

    I am properly and rightly abashed for my cockeyed view of the application of the tax deduction. Thank you for bringing me back to some degree of reality after my little rant.

  • -1

    Riffraff

    @ Herve Nmn L'Eisa

    You have the right idea. I get tired paying for someone else's lifestyle. At the very least, the payments should be in the form of a voucher that can only be spent on school/daycare or verifiable things that the child directly benefits from. When people get uncontrolled free money they just increase their everyday spending and the ratio for education spending takes the normal bottom of the list position.

  • -2

    Jonathan Prin

    True. Vouchers best solution. So funny in Japan and many other countries that issue is money. Not renewing generation is dying or losing identity. Life is sex and having normally at least two kids. Nature. Too late for Japan that will lose more than 30% (!) of its actual population in 2050...except if immigration is accepted at highest level. Sometimes, it is better to think with your willy...

  • -2

    Jonathan Prin

    BTW, 10000 yen/month is peanuts in Japan.

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