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Japan's economic package to deal with epidemic to top ¥30 tril

36 Comments

The Japanese government and the ruling coalition are considering an emergency economic package totaling more than 30 trillion yen to cushion the impact of the coronavirus outbreak, sources close to the matter said Sunday.

The expected sum includes spending by the private sector. The spending by the government for the planned stimulus is likely to surpass 15 trillion yen, the sum the government spent in an economic package in the wake of the global financial crisis sparked by the 2008 failure of Lehman Brothers Holdings Inc.

The new package could involve providing cash and gift certificates to the public, as well as subsidizing the people with part of their travel expenses, the sources said.

It would also facilitate financing for small and midsize companies so they can continue business and maintain employment.

The government and the coalition, which comprises the Liberal Democratic Party and its junior partner Komeito, are considering deficit-covering bonds as a source for the package, which they plan to finalize possibly in early April, according to the sources.

The two sides are expected to start substantial negotiations for the package after the Diet passes the initial budget for fiscal 2020 in late March.

The government and the coalition are unlikely to reduce the consumption tax from the current 10 percent because tax revenues are a major source for rising social security spending amid the rapid aging of the nation's population.

Some LDP members are calling for lowering the tax rate to 5 percent to stimulate personal spending and bolster the economy, an idea backed by some opposition lawmakers.

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The Japanese government and the ruling coalition are considering an emergency economic package totaling more than 30 trillion yen to cushion the impact of the coronavirus outbreak, sources close to the matter said Sunday.

Why not showing the amount in US dollar to make a better sense?

30 trillion yen = 270 billion USD ?

-4 ( +4 / -8 )

¥30 trillion is the amount spent on the Tohoku after the disasters. About ¥25 trillion spend on the nuclear disaster to date. Annual budget ¥100 trillion.

10 ( +11 / -1 )

"....are unlikely to reduce the consumption tax from the current 10 percent because tax revenues are a major source for rising social security spending..." 

Yeah, that makes a lot of sense. Give consumers money....and then take it away!

8 ( +10 / -2 )

That's a lot of money...so are they indirectly admitting that things are about to get much worse?

6 ( +8 / -2 )

the money become virus, the money multiply endlessly without any rationality!

0 ( +3 / -3 )

The Japanese national debt is 1 quadrllion, 83 trillion yen, or $9.8 trillion.

Almost half as big as the U.S. national debt, with a little less than one third the population.

What gives?

2 ( +5 / -3 )

"The new package could involve providing cash and gift certificates to the public,"

When faced with a new & unprecedented crisis , lets roll out the same old solutions ( 12,000 yen handout & coupon style )  that did not work before. Can the oyaji dinosaurs running this place get any more pathetic?

LDP at its best.

7 ( +9 / -2 )

The government and the coalition are unlikely to reduce the consumption tax from the current 10 percent because tax revenues are a major source for rising social security spending amid the rapid aging of the nation's population.

The 2% rise in sales tax to 10 % was one of the main reasons the Japanese economy began to slow badly in the last quarter of 2019.

The LDP's answer to everything was raise the consumption tax which says a lot about years and years of Abenomics.

Now they are going to bail out big businesses again.

I wonder what will happen to the self employed people here in Japan if they lose their jobs.

Abe has no idea how to run a country like many politicians around the world!

8 ( +9 / -1 )

Serrano

The Japanese national debt is 1 quadrllion, 83 trillion yen, or $9.8 trillion.

Almost half as big as the U.S. national debt, with a little less than one third the population.

What gives?

The national debt is less than 50% of the America one. Unlike America, Japan owns its debt. The per capita is less than America.

With the package here and also in America its not a time to worry about and better save the people and the economy otherwise not much will matter.

1 ( +4 / -3 )

Zichi

It's pointless to bang on this issue of Japan's debt.

Many are idiots and will carry on being idiots.

-7 ( +0 / -7 )

30,000,000,000,000 by 126,800,000 comes to 236,593 per person. Have to wonder if much of that money will actually reach the hands of the public, or will it be politically connected businesses who get the lions share. Given the LDP's track record I'm sure it will be the later.

7 ( +7 / -0 )

Most of this 30 trillion yen is going to be wasted and will just add to Japan's national debt.

The national debt is less than 50% of the America one. Japan owns its debt. The per capita is less than America.

How do you figure? Japan has less than one third America's population, with near 50% of the amount of debt.

That being said, extraordinary measures have to be taken to deal with this crisis. How about temporarily eliminating the consumption tax? That would put a lot of money in the consumers' hands without wasting tax money.

1 ( +3 / -2 )

Not simple numbers to crunch here. As tourism has already declined logically lowering the sales tax to 5% is a good short term measure. It is mentioned that this does take considerable effort and time by businesses due to outdated infrastructure such as outdated IT systems and the continual use of fax machines though. Again, underlying problems are coming to the surface that if steps aren’t take now will not go away long term. Very unlikely best method of reducing the sales tax will happen. Deficit backed bonds means more debt to GDP, which can’t be helped with current minus interest rates. Helicopter money and painful gift cards on the horizon...

2 ( +3 / -1 )

@geronimo2006 I'm sure you're right.

Helicopter money and painful gift cards on the horizon

Oh yeah, the gift cards. LOL

3 ( +4 / -1 )

I reckon normal income tax payers people will need the cash to cover food, rent and bills though. Gift cards will have an expiry date so should force people to use them or the government can put it back in their pockets to try a different attempt, maybe not the worse plan as long as the expiry date is within 3 of 6 months. 50/50 cash/gifts cards is most likely. Best solution overall considering there are no quick fixes available.

0 ( +0 / -0 )

American and Japanese national debt per capita is about the same. America $70,000. Japan $77,000.

American National Debt $23 trillion. Japan National Debt $10 trillion.

But the difference is that Japan 100% owns its debt.

American National Debt will greatly increase during 2020.

People without work need money in their pockets. If you have no money then cutting sales tax don't matter much.

People need to receive a living wage monthly of at least ¥250,000.

5 ( +7 / -2 )

Geronimo says

30,000,000,000,000 by 126,800,000 comes to 236,593 yen per person.

Thanks for that, it gives it more meaning. Nearly one million yen for a family of four.

I reckon we'll see a token payment of something like 10,000 yen per person. I do some tourism-related work as a sideline, and I guess coronavirus has cost me 500,000 yen in commission on refunded and lost bookings.

0 ( +0 / -0 )

Zichi

"But the difference is that Japan 100% owns its debt."

"Japan owns its debt"

It's clear some don't grasp the meaning of the above statement.

You've got some more "baby-sitting" do do,I'm afraid.

-2 ( +1 / -3 )

Why not showing the amount in US dollar to make a better sense?

Because it's an article about Japan, from a Japanese news service, on a Japanese website, aimed at people who live in or are very familiar with Japan, discussing an amount of Japanese yen. Why should it cater to your particular demand?

3 ( +3 / -0 )

Japan national debt ¥11 trillion. National wealth 43 quadrillion yen or $30 trillion. Greater than the whole of the American National Debt.

3 ( +3 / -0 )

I hope if this “financial package/support” gets through, the Gov’t wont limit to families with young kids or elderly ONLY as mentioned on previous news. I have 2 SR HS kids. Our household pays Taxes too (Income, Residence etc) but we don’t get anything back from the Gov’t

only those who have young children.

0 ( +0 / -0 )

The stimulus package should benefit almost everyone except those who are rich enough and don't need it. But the most urgent need people should always come first.

1 ( +1 / -0 )

That won't be enough money. I bet a large portion will be used to cover the major investors in the Olympics and not the general public.

2 ( +2 / -0 )

The stimulus package should benefit almost everyone except those who are rich enough and don't need it. But the most urgent need people should always come first.

They absolutely should but as usual here, they won't.

2 ( +2 / -0 )

Japan owns its debt - really?

Assuming it has to be paid back at some later date (which is the legal basis for the lending and which borrowers rely on), then I guess that means that the Government will have to print tons more money to repay it.

Which means that even if a crisis doesn't opccur as a result of foreigners owning the debt, a currency or inflation type crisis is a possibility....

The fatc that hasn't happened yet despite rampant money printing is puzzling.  but doesn't mean it won't.  and when it does it might be a huge movement due to pent up pressure.....

1 ( +1 / -0 )

...as well as subsidizing the people with part of their travel expenses

Wait....what? Using money to subsidize the exact sort of thing people should not be doing right now???

I'm getting really sick and tired of things this government does not making any sense.

1 ( +1 / -0 )

Why not showing the amount in US dollar to make a better sense?

It makes no sense at all to put a dollar price on a Japanese initiative, funded in Japan, by Japan, for Japan, in the Japanese currency.

In just the past week or so the dollar has fluctuated from around ¥108 to around ¥112, so the $ value could be seen as anything from $265 billion to $277 billion. And going forward there's no knowing how much more volatility we are gong to see.

Translating everything into dollars when most people don't use dollars in their daily lives makes no sense and serves only to muddy the waters.

Invalid CSRF

5 ( +5 / -0 )

Japan never has to repaid the national debt just like American won't. It just needs to service the debt and no external power or person can force Japan to do anything about it.

-1 ( +0 / -1 )

America does not have to pay back its debt to foreigners, but Japan sure must pay back its borrowed funds to its own nationals.

1 ( +1 / -0 )

Agree, doesn't have to repay the entirety of its borrowings but cost of servicing goes up every time it borrows more.  And that cost requires additional funding or implies less money spent on useful stuff.  and as the economy continues to stagnate only way to service debt is to print more money to try and stoke inflation or otherwise monetize it.  which so far has failed.  But if they ever do get inflation going, my guess is it will be a wild ride.

0 ( +0 / -0 )

Tax payers money again ???.

1 ( +1 / -0 )

And, from all this they have offered tax breaks for corporations and a one-off payment of ¥12,000 ($120) per person for the minions. Who’s coffers is the rest gonna fill?

1 ( +1 / -0 )

"....are unlikely to reduce the consumption tax from the current 10 percent because tax revenues are a major source for rising social security spending..."* 

Yeah, that makes a lot of sense. Give consumers money....and then take it away!

Consumption tax is only 10% - not 100%.

So giving people money and maintaining consumption tax (something has to pay for the social welfare system especially in times of recession) is a smarter option, than blowing away the consumption tax at a time when overall tax revenues are going to be utterly decimated - can you imagine income or corporate tax revenues increasing in the months ahead? I can't. Consumption tax is the only remotely stable source of tax revenues.

-1 ( +0 / -1 )

The 2% rise in sales tax to 10 % was one of the main reasons the Japanese economy began to slow badly in the last quarter of 2019.

That has ziltch to do with the global coronavirus pandemic, which is going to completely overshadow the impact of the consumption tax hike.

The LDP's answer to everything was raise the consumption tax

No. It's what all parties agreed to ages ago, and they only finally got to 10%, and even then, only by introducing a bunch of complication to the system through the introduction of multiple rates.

The consumption tax hike is all about Japan's public spending being actually paid for by someone, sometime. How about the people who are living in Japan pay for all the spending that their government does on them? Consumption tax is how it is done, and it's still lower than in other better run economies elsewhere.

Now they are going to bail out big businesses again.

This isn't about bailing out big business, this is about tiding over the entire economy as best as possible while we work through this coronavirus pandemic. I hate bailouts myself, but letting huge swaths of industry go out of business (and that employment with them) would be a dumb idea, versus trying to ride this pandemic crisis out.

-1 ( +0 / -1 )

U are perfectly correct. who is getting these money ???.

0 ( +0 / -0 )

Well said, @zichi. Making sure that people have money to spend, (as well as making sure companies have capital so they can hire, as well as keep people hired) so that way the economy can keep floating, is a lot more important than any country‘s national debt right now. I mean, what good is taking care of the national debt, if most people are out of work, and/or your economy’s in the toilet?

0 ( +0 / -0 )

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