EDITORIAL: Funding child allowance

The government has yet to secure a revenue source to finance the proposed raise in the child-care allowance, even though the program is the government's signature policy initiative. It should be ashamed to face children.

The administration of Prime Minister Naoto Kan has decided to increase the monthly child allowance for a child younger than 3 years old by 7,000 yen ($85) to 20,000 yen, starting next fiscal year.

With the income tax deduction for children under 16 to be phased out, starting next year, the measure is intended to prevent net benefits from falling below the amount paid under the old system. This is probably necessary.

But the administration has yet to figure out how to raise the 245 billion yen needed to finance the increase. The administration has been considering scaling back on some deductions designed to reduce the tax burden.

One on the hit list is the deduction for adult dependents aged 23--69. The proposal on the table would make households earning more than 5.68 million yen a year ineligible for the deduction. This is a plausible option, although the argument that special consideration should be given to people who cannot work despite their desire to do so deserves serious attention.

Another target is the deduction for a spouse, designed mainly for households with a full-time homemaker. Households with a spouse whose annual income is 1.03 million yen or less are allowed to deduct 380,000 yen in principle from the taxpayer's taxable income. Debate is now raging over the proposal to make households with annual income of more than 12.3 million yen ineligible for this deduction.

This is a fairly reasonable way to promote income redistribution as long as the deduction remains intact for low-income households. But many lawmakers within the ruling Democratic Party of Japan are rather skeptical about the idea.

People with higher annual incomes are more likely to take advantage of this tax break, according to the government's Tax Commission. That's apparently because the tax deduction is claimed mainly by households that have enough income without the wife working.

On the other hand, the lower the husband's income, the more likely that his wife has a job. In other words, the tax deduction is not available for many of the households where both husband and wife have to work to make ends meet.

Given the situation, a reasonable case can be made for a proposal to solve the financing problem by raising taxes on high-income earners who can afford to bear a heavier burden.

There is a similar limit to eligibility for the special spousal deduction for households with a spouse whose annual income is over 1.03 million yen but not exceeding 1.41 million yen. This makes it easier to win public support for the idea of making high-income households ineligible for the deduction.

It is crucial to find a permanent revenue source to finance the 7,000-yen increase in the monthly child allowance. Surpluses and reserves in special budget accounts, known as "maizokin" (buried treasure), can only provide temporary financing.

But increasing the government's dependence on debt to finance its spending would be totally unacceptable. There is absolutely no room, either, for any politically motivated attempt to avoid an increase in the tax burden before next spring's unified local elections.

There is no rationale for shifting the burden of taking care of today's children to future generations. Avoiding debt financing of the envisioned increase in the child allowance is all the more important because the program, introduced in the current fiscal year, was effectively financed by debt.

Also important is enhancing overall policy support for child care by expanding day-care services and other nonfinancial aid, in addition to raising cash payments. But securing stable financing of such measures requires a fundamental reform of the tax system, including the consumption tax.

The time for stop-gap financing measures is clearly over.

--The Asahi Shimbun, Dec. 7