In response to the coronavirus crisis, Japan will provide households with $2,768 as part of its record-setting stimulus package.
Bloomberg reports that Prime Minister Shinzo Abe approved the household amount of 300,000 yen in advance of announcing of the measure next week, according to Fumio Kishida, policy head of the Liberal Democratic Party (LDP) after meeting with Abe and Finance Minister Taro Aso on Friday (April 3).
The reports said details emerged three days after the party unveiled $554 billion in assistance aimed at supporting households and businesses battered by the fallout from the coronavirus pandemic.
Japan’s move follows President Donald Trump’s signature on a $2 trillion coronavirus relief bill one week ago to ease the economic pain from the COVID-19 pandemic ripping through the U.S. The bill provides increased unemployment benefits, small business loans and direct payments of up to $1,200 to taxpayers within three weeks.
The details of Japan’s cash payouts have yet to be hammered out, Kishida said per the report. As payments will be targeted for those most in need, the focus will be on the criteria the government uses to decide who qualifies for the cash, the report said.
Akira Amari, the party’s tax policy head, told the news outlet that lowering the sales tax is not an option. He doesn’t think that rate should be lowered, nor does he believe taxes should be raised to fund economic measures in the near future.
“We have various tools to stimulate the economy and I don’t think it’s appropriate to cut a foundation of social stability,” Amari told reporters, referring to the fact that sales tax revenue plays a key role in funding social services. “It’s extremely difficult to increase or decrease the sales tax rate.”
Temporarily reducing the tax rate has been floated as a stimulus idea. Earlier this week, the LDP said its measures to distribute as much as $92 billion to the public is equivalent to reducing the sales tax by 5 percentage points, a move that already suggested resistance to the idea of actually cutting the tax, Bloomberg reported.
The report also noted Amari gave a green light for the government to issue debt-covering bonds and put fiscal consolidation efforts on hold.