Japan to Spend $33B in Various Packages to Regulate Inflation

Three government officials told Reuters on Wednesday that Japan's government is considering spending around $33 billion on low-income household payments and an income tax cut as part of a package of measures to cushion households from rising living costs.

The spending, estimated at around 5 trillion yen ($33.37 billion), will include a one-time income tax hike and payments to low-income households, officials said, confirming a Nikkei newspaper report.

The ruling party's influential tax panel will discuss the details of the income tax hike near the end of the year, according to the paper. Because they were not authorized to speak publicly, the officials spoke on the condition of anonymity. The government did not immediately respond to requests for comment.

Inflation has remained above the central bank's target of 2% for more than a year, weighing on consumption and clouding the outlook for an economy that is still recovering from the COVID-19 scars.

With wage increases proving insufficient to offset price increases, Prime Minister Fumio Kishida has announced a plan to alleviate the pain by returning some of the expected increase in tax revenues generated by solid economic growth to households.