Hatoyama decides not to set income limit for child allowances

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TOKYO, Dec. 22 Kyodo -
Prime Minister Yukio Hatoyama decided Monday not to set an income limit in
providing monthly allowances to families with children, rejecting the
Democratic Party of Japan's last-minute call to have one in the face of budget
shortfalls.
Hatoyama, however, said he could not adhere to some of his campaign pledges as
his self-imposed deadline for finishing the drafting process of the fiscal 2010
budget is just around the corner, and expressed his apologies to the
electorate.
One of the promises he could not stick to was the repeal of the current
additional taxes imposed on gasoline and automobiles.
Hatoyama told reporters that the DPJ-led government is in need of money to
carry out economic measures to help the nation move out of one of the worst
downturns in decades, amid a sharp fall in tax revenues.
''I considered things very carefully again and again...One issue is the global
environment and another is the issue of the economy,'' Hatoyama said.
''Considering these two, I decided to abolish the system of the provisional tax
rates, but will leave (most of) the actual rates unchanged.''
He said the government will decide on what to do next with the additional taxes
after studying the feasibility of introducing a new tax system aimed at
fighting global warming over the next one year.
In Japan, gasoline is, for example, currently taxed at a fixed rate of 53.8 yen
per liter, of which 25.1 yen account for the provisional portion.
The repeal of the extra taxes -- introduced in 1974 with the aim of securing
funds for building and maintaining roads -- would have led to a combined loss
of about 2.5 trillion yen in revenues for the central and local governments.
On the allowance program, Hatoyama said, ''The final conclusion was made in
light of the idea that children must be raised by society as a whole.''
For those who feel such child-rearing benefits are unnecessary, he said the
government will set up a framework to enable them to donate the money to local
governments.
The DPJ has promised to provide monthly allowances of 13,000 yen in fiscal 2010
and 26,000 yen from fiscal 2011 for each child of junior high school age or
younger.
Hatoyama reiterated his support for raising the current tobacco tax in fiscal
2010. To what extent the rate will be raised is expected to be announced
Tuesday.
According to lawmakers familiar with the matter, a pack of cigarettes will be
about 100 yen, or 5 yen per cigarette, higher than now after the tax raise.
Hatoyama also said he wants to secure 2 trillion yen for measures to improve
labor conditions and regional economies.
The Cabinet had to iron out differences especially over whether to keep the
additional taxes and set an income limit when providing the allowances -- the
two major stumbling blocks in the way of completing by the end of the year, as
scheduled, the drafting process for the budget for the year starting in April.
The DPJ pledged during the last election, in which it trounced the long-ruling
Liberal Democratic Party, to scrap or reduce the tax rates and provide the
allowances regardless of income levels.
In an about-face, however, Ichiro Ozawa, the powerful secretary general of the
ruling party who orchestrated a landslide election victory in August, asked
Hatoyama last week to review some of the key pledges.
Ozawa said the DPJ's requests are reflecting ''the voices of people across the
country'' when he submitted a set of budgetary requests to Hatoyama.
On Monday, Hatoyama and key Cabinet members had a series of meetings on how to
wrap up the drafting process successfully.
Hatoyama also met briefly with Ozawa to explain his latest decisions.
''I gained his consent,'' Hatoyama told reporters.
After one of the meetings, Finance Minister Hirohisa Fujii told reporters that
the Cabinet will try to endorse an outline of tax reforms on Tuesday and it is
''probably common-sensical'' to finalize the draft on Friday.
The Cabinet aims to endorse the outline Tuesday evening at an irregular meeting
after holding talks with the DPJ's two ruling coalition partners, some Cabinet
members said.
General-account budgetary requests, submitted by ministries and agencies in
October, reached a record 95.04 trillion yen, despite the DPJ's desire to slash
wasteful spending to come up with funds necessary for its key policies aimed at
stimulating domestic demand.
Hatoyama has experienced difficulties in raising money for his key economic
promises, without damaging Japan's already deteriorating fiscal position, while
the Finance Ministry is projecting that tax revenues in fiscal 2010 will remain
stagnant at around 37 trillion yen.
Before launching the government three months ago, the DPJ estimated that about
7 trillion yen would be necessary to implement all of the promises in fiscal
2010.
As a stopgap measure, the Cabinet is trying to generate more than 10 trillion
yen from nontax revenues.
The two small ruling parties, the Social Democratic Party and the People's New
Party, are planning to ask the DPJ to raise at least 15 trillion yen by digging
into reserves and investment returns amassed in special accounts.
==Kyodo
2009-12-22 00:36:42