Japan PM Ishiba: Plans to distribute 20,000 yen per person, 40,000 yen per child, to low-income earners in cash handout scheme

Japan PM Ishiba: Plans to distribute 20,000 yen per person, 40,000 yen per child, to low-income earners in cash handout scheme

Prime Minister Shigeru Ishiba of Japan has announced plans to distribute a cash handout scheme to combat rising inflation, with the Liberal Democratic Party (LDP) and its coalition partner Komeito finalizing a proposal to provide cash to the public. The scheme, which aims to be implemented by the end of the year, involves giving every resident in Japan a 20,000 yen ($138) cash handout, regardless of income level.

The proposal also includes an additional 20,000 yen for lower-income households that are exempt from the residential tax. The government plans to finance the payouts through a larger-than-expected surplus in tax revenue for the fiscal year that ended in March. To ensure speedy distribution, the payments will primarily be made through bank accounts associated with the government My Number personal identification system. Alternative delivery methods will be used for residents without linked accounts, while additional payments for tax-exempt households will be administered through local governments [1].

The decision comes as opposition parties have been calling for a reduction in the consumption tax to alleviate household burdens. However, LDP leaders have rejected this idea, citing concerns that it could undermine the country’s social security system, which relies on the consumption tax of up to 10 percent. Instead, the government hopes to garner broader public support by redistributing excess tax revenues and providing additional aid to low-income groups [2].

The payout plan is part of the LDP's campaign pledges for the upcoming Upper House election in July. The party is considering increasing the benefit amount for households that are exempt from resident tax, aiming to include such cash handouts in their campaign pledges. The amount of cash handouts will be determined based on a tax revenue surplus in fiscal 2024 [3].

The cash handout scheme is expected to face criticism for extending benefits to high-income earners. However, officials argue that they opted against means testing in favor of simplicity and swift implementation. The proposal comes as the ruling bloc seeks an alternative economic relief policy ahead of the crucial summer election [4].

Prime Minister Ishiba has also pledged a 50% increase in average pay and a ¥1 quadrillion (US$6.9 trillion) economy by 2040, aiming to achieve wage increases that exceed inflation. The government will lay out some basic principles for future economic policies by the end of the week, with the goal of boosting productivity and reducing costs to overcome rising prices [5].

References:
[1] https://www.asahi.com/ajw/articles/15837788
[2] https://japannews.yomiuri.co.jp/politics/politics-government/20250613-263590/
[3] https://www.businesstimes.com.sg/international/japans-ruling-camp-pledge-cash-handouts-election-campaigns-local-media
[4] https://www.thestar.com.my/aseanplus/aseanplus-news/2025/06/10/japans-pm-ishiba-pledges-50-pay-rise-by-2040-ahead-of-elections
[5] https://www.tradingview.com/news/reuters.com,2025:newsml_L1N3SE0C4:0-japan-pm-says-fresh-issuance-of-deficit-financing-bonds-not-an-option/