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Rising inflation? Japan’s Prime Minister announces his plan for tax cuts and cash handout.

By on October 27, 2023

Inflation is on the rise and  some families are feeling the squeeze as the price of food, (excluding fresh food) shot up to 7.3 percent and lodging fees to 42.8 percent according to government data. Core consumer prices in central Tokyo climbed 2.7 percent in October from the previous year, posting a faster pace of increase for the first time in four months.

Responding to the impact of the recent inflation surge across households, Japanese Prime Minister Fumio Kishida announced Thursday at a policy meeting, his plan to cut taxes by 40,000 yen per person (income tax 30,000 yen + residence tax 10,000 yen) in June 2024.

Kishida also announced an additional plan to provide a cash handout of 70,000 yen to low-income households exempted from residential tax payments to be adopted at a cabinet meeting on Nov. 2, 2023. This would be similar to the ¥30,000 cash handout distributed in spring of this year to households impacted by soaring prices.

Tax cuts and cash handout combined, the government’s total rescue plan is expected to reach around 5 trillion yen. This will be funded by income and individual residential tax revenues surplus over the past two years amounting to 3.5 trillion yen.

Japan intends to secure  additional funds necessary for the planned cash benefit under a fiscal 2023 supplementary budget to be submitted at the current extraordinary parliamentary session.

For households not eligible to benefit fully from the tax cuts and cash benefit because of the income threshhold, Prime Minister Kishida said that they will be provided a special benefit.

 

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