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Japan's 100,000-yen handout for kids labeled 'unfair' due to income criteria

This file photo shows 100,000 yen in cash. (Mainichi/Kazuhisa Soneda)

TOKYO -- Criticism has emerged over the Japanese government's plan to distribute 100,000 yen (about $880) to every resident in the country aged 18 or under, as it makes it possible for some families with just one provider to be ineligible for the handout despite earning less than dual-income households that can receive the benefits.

    The national government set the annual income cap for the 100,000-yen handouts at 9.6 million yen (about $84,400), a rough estimate for families with two children and a spouse who earns 1.3 million yen (about $11,400) or less per annum. The income cap differs based on the number of children and other factors.

    Under this system, the annual income cap that determines whether a child of a family is eligible for the handout is applied to the earnings of each household's main breadwinner, instead of the household's total income. This gives rise to situations where children of households earning a total income exceeding the specified cap can receive the handouts, while those with less overall income cannot.

    "It's not that we want to be given the money, but I can't approve it (the system)," said a 41-year-old office worker in Tokyo's Itabashi Ward on the 100,000-yen handout policy. The man lives with his 43-year-old wife -- a homemaker -- and his 2-year-old daughter. As the man's annual income surpasses 9.6 million yen, the family will not be eligible for the handout. He commented, "The fact that it's not clear whether the handouts are meant to assist childrearing or are part of coronavirus economic stimulus measures is a problem to begin with. If it's to assist childrearing, isn't it wrong that income restrictions are being set?"

    Households with one provider who earns 9.6 million yen or more, like the office worker's family, are ineligible for the 100,000-yen handout, but those with spouses both earning 8 million yen each, for a total of 16 million yen (about $140,700), become eligible.

    In response to the matter, there were critical voices even within the ruling Liberal Democratic Party, including Policy Research Council chief Sanae Takaichi who said that "an extremely unfair situation will occur." The national government ended up changing its stance to let local governments abolish the income cap under their own discretion.

    The income cap for the recent handout was taken from the system of a child care allowance program that distributes a maximum of 15,000 yen (about $132) per child every month to households with middle-school age kids or younger.

    Local governments know the households eligible for payments as well as their bank accounts, and administrative bodies are capable of swiftly distributing the money even if the eligible parties do not file applications. The administration of Prime Minister Fumio Kishida decided to use this system, with the aim to call attention to the speedy payments.

    So why does the child care allowance program set an income cap based on the earnings of the principal breadwinner? This has to do with the state of society at the time of the system's establishment.

    Child care allowances were created in 1972, as a measure to assist households with many children. While an income cap had been in place from the start, families at the time generally consisted of a father, stay-at-home mother, and a child. Statistics from 1980 also show that there were 11.14 million households in Japan where the husband was the sole provider, greatly surpassing the 6.14 million households with parents who both worked. Therefore, it was reasonable to a certain degree that the income cap was based on the earnings of the main breadwinner, or the husband.

    However, in the late 1990s, the number of dual-income households outstripped those with just one provider. Statistics for 2020 found that the number of dual-income households stood at 12.40 million, more than twice the number of the latter, which totaled 5.71 million.

    As it became normal for both parents to be working, the national government was also conscious of this change, and an advisory body to the finance minister recommended in April 2017 to review the income cap so that it will be based on the household's total earnings. Similar proposals were made in 2019 and 2020. However, moves to review the system did not gather momentum, and the issue remained abandoned.

    Shungo Koreeda, chief researcher of the Daiwa Institute of Research who is familiar with the social security system, commented, "Between households with just a working husband and two working parents that earn the same amount of income, dual-income households have advantages, such as less tax burdens." He added, "The present system is outdated, and the handouts should in any case be decided based on overall household income."

    (Japanese original by Tsuyoshi Goto, Business News Department)

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