Photo/Illutration A sleeping baby (Shiori Tabuchi)

Doubling the family allowance for a third children and beyond is among the key "different dimensions" measures approved by the Kishida Cabinet on June 13 to tackle the nation's falling birthrate. 

“The years before the 2030s, when the younger population will sharply decrease, offer the last chance for Japan to reverse its declining birthrate,” Prime Minister Fumio Kishida told a news conference. “(The measures) represent a momentous step.”

The package of measures, dubbed the “Children’s Future Strategy Policy,” features annual outlays of 3.5 trillion yen ($25 billion) over the three years from fiscal 2024.

The main pillar is increased financial assistance to families with younger children centered on the expansion of child allowances, which will call for about 1.2 trillion yen annually.

Currently, a monthly allowance of 15,000 yen each is paid for children under the age of 3 and 10,000 yen is paid until they graduate from junior high school.

For the third child and subsequent siblings, 15,000 yen is paid until they graduate from elementary school.

But if the family’s primary breadwinner earns 9.6 million yen or more annually, the allowance is reduced to 5,000 yen, and if he or she earns 12 million yen or more, the family is not eligible for any allowances.

Under the Children’s Future Strategy Policy, these income thresholds will be eliminated, allowances will be paid until children graduate from high school, and the amount for the third child and subsequent siblings will be doubled to 30,000 yen.

Kishida said the government plans to implement these measures in October next year.

To underscore the impact of new child allowance policies, he said a family with three children will receive a maximum of 11 million yen by the time the youngest child graduates from high school, up about 4 million yen from the current payouts.

Shigeki Matsuda, a professor of family sociology at Chukyo University, said the expansion of child allowances and other measures will help reduce the financial burden on families raising children.

But he is concerned about a clause in the Children’s Future Strategy Policy that said the government will examine tax breaks for families with high school-age children now that child allowances will be provided until children graduate from high school.

Matsuda said some families will not benefit from the expansion of child allowances if the tax breaks, under which 380,000 yen each can be deducted for children aged 16-18 from their annual taxable income for the income tax, are abolished.

Government spending per child under the Children’s Future Strategy Policy during the three years from fiscal 2024, when priority programs will be introduced, is expected to be one of the highest among industrialized nations, government officials said.

Kishida instructed his ministers to raise the annual spending planned for the three-year period by 500 billion yen to 3.5 trillion yen on May 31, only a day before the government released the draft of the Children’s Future Strategy Policy.

The government plans to earmark the additional 500 billion yen for programs such as tuition exemptions and reductions at universities and other institutions, and improvement and expansion of scholarships.

The government plans to fund the package of measures primarily by reducing social security spending and collecting funds through the system for contributing to social insurance premiums.

Details of the funding plans will be presented at the end of the year, officials said.

The government hopes to secure stable financial resources by fiscal 2028. It plans to issue short-term special bonds to cover any shortfalls until that time.

The Children’s Future Strategy Policy said taxes will not be raised to fund these measures.

The government plans to draw up a road map for expenditure reforms by the end of the year and submit related legislation to the ordinary Diet session next year.

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