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Gov't mulls coronavirus cash handouts topping 12,000 yen for all in Japan

Prime Minister Shinzo Abe is seen answering Diet questions over government measures to address the Japanese economy hit hard by the novel coronavirus pandemic, during a House of Councillors Budget Committee session on March 16, 2020. (Mainichi/Masahiro Kawata)

TOKYO -- The government and ruling parties are considering handing out more than 12,000 yen per citizen in cash as part of an emergency economic stimulus package in response to the spread of the novel coronavirus in Japan, it has been learned.

    The move comes amid sagging consumer spending following government calls urging the public to refrain from non-essential outings to prevent the spread of the new coronavirus. While the government in 2009 doled out 12,000 yen each to the public in response to the global financial crisis triggered by the collapse of Lehman Brothers in 2008, it is mulling cash handouts exceeding that amount as part of economic stimulus measures to be formulated as early as April.

    Prime Minister Shinzo Abe met with Fumio Kishida, policy chief of the ruling Liberal Democratic Party (LDP), to discuss economic measures at the prime minister's office on March 17. Following the talks, Kishida told reporters, "I heard about the prime minister's intentions, and we reached an agreement over the broad direction."

    Abe instructed Kishida on March 16 to compile an economic stimulus package and is apparently aiming to implement cash handouts at the initiative of the LDP.

    At the time of the 2009 handouts under the Cabinet of Prime Minister Taro Aso, who currently serves as deputy prime minister and finance minister, a total of some 2 trillion yen was allocated with 20,000 yen each distributed to youngsters aged 18 or lower and seniors aged at least 65, and 12,000 yen each to others. However, some pointed out later that the cash benefits "ended up as savings and hardly led to propping up consumer spending."

    Calls are mounting within the government and the LDP for cash handouts in excess of the 2009 amount to stimulate consumer spending. At a general meeting of LDP lawmakers in both houses of the Diet on March 17, Prime Minister Abe said, "We must bring our flagging economy to a V-shaped recovery. To that end, let's work out drastic and powerful economic measures in a bold manner without being constrained by our precedents." A senior LDP official echoed Abe's calls, saying, "We need to come up with drastic handout amounts."

    The overall sum of the upcoming emergency package, which centers around the cash dole-outs, is inevitably estimated to swell. At a press conference on March 16, Kishida pointed out that pump-priming measures on a scale far exceeding the 13.2 trillion-yen monetary steps taken at the end of 2019 are being called for. A high-ranking LDP official noted that the coming fiscal measures "would amount to at least 15 trillion yen."

    Some in the ruling and opposition parties are asking the government to lower the consumption tax from the current 10% to spur consumer spending. However, a senior LDP official opposed the idea, saying, "Businesses have finally adapted to the tax hike to 10% following its implementation in October 2019. If it is lowered, they would face confusion." The official continued, "It would also be a hassle to bring the once lowered tax to the original rate, and it would take time before the measure proves effective. It would be difficult in two or three ways.

    Others are advocating limiting the cash distribution to households with young children that are affected by nationwide school closures to prevent the spread of the new coronavirus, or enhancing the point reward system for cashless payments, among other measures. As such schemes, however, would cover only limited segments of the public and apparently bring little benefits to elderly people, the government and ruling coalition are leaning toward introducing cash handouts in consideration of their wide coverage and quick effectivity.

    The LDP plans to put together recommendations for economic stimulus measures centering around cash handouts as early as the end of March. The government intends to formally map out measures possibly in early April based on the LDP proposals after the passage of the fiscal 2020 budget.

    (Japanese original by Yusuke Kaite, Political News Department)

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