Photo/Illutration The government plans to extend subsidies for keeping gasoline prices down. (Asahi Shimbun file photo)

The government policy to deal with soaring commodity prices is going astray.

Without showing any way out, the Kishida administration plans to continue providing gasoline subsidies despite their strong side effects.

The government on Sept. 9 wrapped up a package of additional measures to cope with a broad-based rise in commodity prices, particularly energy and food products.

The package is centered on extending subsidies for keeping down the prices of gasoline and light oil for the third time in a series. The closing date of the subsidies, set at the end of September, will be prolonged at least until year-end.

While a budget of 1.9 trillion yen ($13 billion) has already been allocated for that purpose, the extension will likely cost an additional 1.3 trillion yen, officials said.

We cannot afford to turn a blind eye to the arbitrary way the government has decided on the package that will consume huge sums of taxpayers’ money and have a major impact on people’s livelihoods. The matter should be discussed in the Diet.

It is understandable that certain fiscal assistance is deemed appropriate to level out an abrupt rise in the prices of essential goods. However, assistance should basically be provided only to ride out the immediate crisis.

Designed to help buy time, such a measure is supposed to be replaced by direct support measures for households and businesses in need.

Prolonged subsidies for keeping down gasoline prices across the board would benefit wealthy people and others and hamper the market mechanism, through which an increase in prices would naturally work to suppress demand.

The measure could also work against the trend for saving energy and going carbon-free.

In fact, the government has explained the subsidies as a measure for mitigating drastic changes since it invoked them in January.

This time around, as would have been expected, plans were floated to lower the upper limit of the subsidies in stages together with extending the subsidies. However, that proposal was overturned at the last minute and no exit strategy was presented.

Extending the closing date again and again without serious debate does not warrant the name of a responsible policy design.

Also included in the policy package is a measure to peg the price of imported wheat sold by the government to the private sector.

Rice, however, could be used to replace wheat as a staple food. Prolonged intervention in the prices of a specific product above and beyond the scope of a mitigation measure is very questionable because it could distort consumer choices.

The package also includes 50,000-yen payouts for low-income households that are exempt from residential taxes.

Providing assistance to people in need is reasonable as a general course of action, but the measure contains many points that require further discussions, such as the scope of eligibility for the payouts and the appropriateness of their amounts.

Either subsidies or payouts are significant policy measures accompanied by fiscal expenditures in large sums. In-depth discussions in an open manner and from diverse viewpoints are essential to make them truly effective.

They should be discussed in the Diet, not the least from the standpoint of fiscal democracy.

Be that as it may, the Kishida administration has again decided to tap into the reserve funds to cover the expenses of the measures against the surging prices. It has refused to convene an extraordinary Diet session as demanded by opposition parties.

The public would have to foot the bill someday if the administration were to continue to take unreasonable policy measures in such an arbitrary manner.

Prime Minister Fumio Kishida should dispense with the attitude he has taken right now if he still retains something of his self-touted “ability to listen.”

--The Asahi Shimbun, Sept. 10

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