A 5-percent point reward system for cashless payments is offered at some stores after the consumption tax rate was raised in October. (Asahi Shimbun file photo)
Cash handouts to all residents, e-coupons, tax cuts and an expansion of points reward systems for cashless payments are among economic stimulus measures being proposed by the ruling and opposition parties.
The ideas have been suggested for inclusion in a package of emergency measures that the Abe administration plans for the next fiscal year to cushion the enormous impact of the new coronavirus outbreak on the economy and people’s lives.
Abe says his government will come up with a “mega-scale policy commensurate with the magnitude (of the pandemic).”
Some members of the ruling coalition insist that the government must consider a fiscal spending larger than the 15.4 trillion yen ($139 billion) disbursed following the collapse of Lehman Brothers in 2008 or the 13.2 trillion yen stimulus package approved last December.
With everybody battling fears of the unknown and unpredictable virus, urgent action is needed.
However, in stimulating the faltering consumption, it would be counterproductive to do anything that will raise the risk of infections from increased person-to-person physical contact.
Practicing good judgment is vital to determining what measures should be implemented and when, based on the state of the economy and the pandemic.
The overall scale of the stimulus package should not be a determining factor. An objective assessment of the aim, anticipated results and challenges of each measure should serve as the basic guideline for setting priorities.
The top priority should be protecting the lives of people who have lost their jobs or incomes. A clear-cut system must be established to ensure that people who desperately need help are given priority treatment.
The government is providing emergency loans to independent business operators and others, irrespective of whether they have been impacted by the nationwide school closings.
For people who have difficulties paying utility bills, the government is asking service providers to observe a certain grace period, and a similar moratorium is planned for payments of taxes and social security premiums.
We ask the government to keep looking to further improve the conditions and procedures for financial relief.
The government must also come up with measures to prevent businesses from ignoring warnings against holding large-scale events or escalating staff dismissals out of fear of diminishing earnings
Regarding cash payouts, the government dispensed 12,000 yen to every resident as a post-Lehman Shock relief measure in 2009. Seniors aged 65 and older and minors 18 years of age or under were entitled to 20,000 yen each.
But experts say many recipients simply bank one-time payouts in their savings accounts, casting doubts on the effectiveness of such a program.
To ensure that the neediest citizens are better served, we believe applying a sliding-scale system of payment would be a better approach than paying a uniform amount to all.
Reducing the consumption tax rate would burden retailers with the extra hassle of re-labeling price tags. Moreover, a tax cut is not expected to stimulate consumption unless the prices of goods actually come down in stores.
The points-based customer reward system would be of no benefit to people who are not enrolled in cashless payment programs.
It is vitally important to carefully calculate and compare the costs and anticipated outcome of each policy to be implemented.
The coronavirus pandemic has severely restricted the movements of people and goods across borders, including drastic drops in imports from China.
The government must hasten to examine the impact on domestic corporate activities and the economy as a whole and strive to take the most effective steps.