Japan's Ruling Coalition to Offer Cash Handouts Amid Rising Living Costs

In May, Prime Minister Shigeru Ishiba, representing the ruling Liberal Democratic Party, met with Tetsuo Saito, the leader of Komeito, a junior coalition partner. The upcoming Upper House election is anticipated to be dominated by discussions on how to address the increasing cost of living.

The ruling coalition and the opposition have established distinct policy positions on how to assist the public with the rising cost of living. The Liberal Democratic Party and Komeito intend to incorporate cash handouts into the government's economic measures and their joint campaign promises for the upcoming Upper House election.

During a meeting in Tokyo on June 10, key officials from the coalition parties agreed that their policy research councils would deliberate on the specifics of the proposed benefits, including the amount. Sources indicate that coalition officials have considered providing tens of thousands of yen per person, without income restrictions, and funding the program using a surplus from fiscal year 2024 tax revenues.

The handouts are likely to be distributed in cash or through the Myna Point program, which is connected to the government's My Number Card system, to ensure a swift distribution. The LDP and Komeito had previously considered a plan to provide approximately 50,000 yen per person in cash handouts in April, but they abandoned the idea after facing public criticism.

The ruling coalition reconsidered the cash benefits after the opposition parties began promising to reduce the consumption tax rate. LDP leaders have dismissed the possibility of a consumption tax cut as an Upper House election pledge, leading Komeito to remove the tax reduction from its list of priority policies. Komeito had already identified the provision of "livelihood support benefits" as a priority, which would return increased tax revenues to the public.

The Upper House election is expected to take place on July 20, with official campaigning likely to begin on July 3.