Redistributive policy

Editorial: Is Japan’s massive inflation-fighting program a rehearsal of random policy?







The Japanese government has put in place a 3 trillion yen (about $21 billion) package to offset the price hike, including a cash payment of 50,000 yen (about $350) to low-income households, extensive subsidies to reduce gasoline prices and a freeze on the price of imported wheat it sells to the private sector.

But if the government continues to take random measures, it will not be able to eliminate people’s feeling of insecurity about their daily lives.

Price spikes continued, mainly for basic necessities due to the fallout from the Russian invasion of Ukraine and the depreciation of the yen. The lower household incomes are, the greater 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 his actions have been inconsistent. While nearly 2 trillion yen has been pumped into gasoline subsidies, people who cannot afford to own a car have not been able to see any benefit from this initiative. As electricity and gas bills also soar, moves to cut prices at the pump have been criticized as giving unfair preferential treatment to those who buy petrol. Moreover, the growing consumption of fossil fuels goes against decarbonization efforts.

The scope of the 50,000 yen donation program has also been questioned. If low-income households exempt from housing tax are eligible for the cash bonus, 70% of these households are elderly people and some of them own property. Meanwhile, many people in households not covered by the subsidy program are struggling to make ends meet as they work as non-regular, low-paid employees.

Essentially, this matter should be resolved by establishing supplementary budgets and deliberating on matters in the Diet. But Prime Minister Fumio Kishida’s dogmatic stance stood out.

The latest package is funded by reserve funds in the fiscal year 2022 budget. The government has a free hand to decide how to spend these funds without bringing the issue to the Diet, undermining financial democracy.

The government had originally planned to cut petrol subsidies, but reversed its position at the last minute. If the government is trying to ride out the declining Cabinet approval rating through the hog barrel, it is simply taking the wrong path.

When the government drew up measures to tackle rising prices this spring, a plan to hand out money to pensioners emerged, but the government withdrew it after drawing criticism as a measure mobilizing votes ahead of the summer House of Councilors elections. The repeated confusion apparently stems from Kishida’s ambiguous distribution policy.

It is imperative to take initiatives to radically close the economic gap, instead of focusing only on palliative measures.

The government is urged to consider asking large corporations benefiting from the fall in the yen to bear their share of the burden to stimulate income redistribution. There is also a need to quickly create an environment that could lead to aggressive wage increases.

Prime Minister Kishida is expected to draw up a new economic recovery plan in October. If he skips the exam to prioritize the scale of the relief package at the behest of some members of the ruling Liberal Democratic Party who are calling for massive public spending, it will only further aggravate public finances. debt-ridden Japan.