The Japanese government has put together a 3-trillion-yen (approx. $21 billion) package to offset rising prices, including a 50,000-yen (about $350) cash handout to low-income households, extended subsidies to curb gasoline prices, and a freeze on the price of imported wheat it sells to the private sector.
But if the government keeps taking haphazard measures, it will not be able to eliminate people's sense of insecurity about their daily lives.
Price surges have continued, primarily with daily necessities due to repercussions from Russia's invasion of Ukraine and the depreciation of the yen. The lower households' incomes are, the heavier the burden they have to bear -- a situation that could widen the economic gap exposed by the coronavirus pandemic.
The government is urged to focus on supporting those in need. Yet its measures have been inconsistent. While close to 2 trillion yen has been injected into gasoline subsidies, people who cannot afford to own a car have been unable to sense any benefit from this initiative. As electricity and gas bills are also soaring, measures to curb prices at the pump have been criticized as unfairly giving preferential treatment to those buying gasoline. On top of this, growing consumption of fossil fuels runs counter to decarbonization efforts.
The scope of the 50,000-yen handout program has also been called into question. While low-income households exempted from residential tax are eligible for the cash handout, 70% of these householders are elderly and some of them hold assets. Meanwhile, many people in households not covered by the handout program are struggling to make ends meet as they work as low-paid, nonregular employees.
Essentially, this matter should be worked out by compiling extra budgets and deliberating on the issues in the Diet. But Prime Minister Fumio Kishida's dogmatic stance has stood out.
The latest package is funded by reserve funds in the fiscal 2022 budget. The government has a free hand in deciding how to spend those funds without putting the matter before the Diet, undermining financial democracy.
The government initially planned to curtail gasoline subsidies, but it reversed its stance at the last minute. If the government is trying to tide over the falling Cabinet approval rate through pork-barreling, it is simply taking the wrong path.
When the government drew up measures to tackle rising prices this spring, a cash handout plan for pensioners emerged, but the government retracted it after it drew criticism as a vote-garnering measure ahead of the summer House of Councillors election. The repeated confusion apparently stems from Kishida's ambiguous distribution policy.
It is imperative to take initiatives to drastically rectify the economic gap, instead of merely focusing on stopgap measures.
The government is urged to consider calling for major companies benefiting from the plunging yen to bear their share of the burden to boost income redistribution. It is also necessary to swiftly create an environment that could lead to aggressive wage hikes.
Prime Minister Kishida is set to compile a new economic stimulus package in October. If he skips scrutiny to prioritize the scale of the relief package at the urging of some in the ruling Liberal Democratic Party who are calling for massive public spending, it will only further aggravate Japan's debt-ridden public finances.