The shape of the child allowance for fiscal 2011 could end up distorting the basic idea behind it. The government needs to find stable funds to make the allowance sustainable and keep it true to its basic idea.
In line with the Democratic Party of Japan's manifesto for the 2009 Lower House election, the DPJ government started giving a monthly allowance of ¥13,000 per child up to third-year middle school students in fiscal 2010 and was to double the amount from fiscal 2011. Japan's financial straits have forced the government to give up on doubling the amount.
The Kan administration, however, has decided to pay an additional ¥7,000 a month to a child younger than 3 to help some households whose disposable income in fiscal 2011 will be less than in fiscal 2010 due to the planned abolition of the deduction for young dependents on the family's taxable income.