The government of Japan and the ruling coalition are considering an emergency economic package worth over ¥30 trillion ($270 billion) to counteract the impact from the Covid-19 outbreak.
The emergency package could include cash and gift certificates or even travel expenses. It could also provide some financing for small and midsize businesses so they can maintain employment.
During the 2008 global financial crisis, caused by the implosion of US housing market, Japan released packages for over ¥15 trillion to combat the financial crisis.
Liberal Democratic Party policy chief Fumio Kishida said:
Fumio Kishida
We need more drastic measures.
Policy chief at Komeito, the LDP’s coalition partner, Noritoshi Ishida suggested granting fixed amount without setting an income limit. The opposition in the face of Seiji Osaka of the Constitutional Democratic Party of Japan and Kenta Izumi of the Democratic Party for the People proposed economic package worth ¥50 trillion.
Meanwhile, Tomoko Tamura, Izumi and Japanese Communist Party policy chief called for reducing the consumption tax in half to 5%. Kashida criticized the tax proposal on the ground it may backfire as consumers might delay buying until after the tax is reduced. He also pointed out it may require extra from companies to revise their computer and other systems
LDP tax panel leader Akira Amari suggested that tax should be suspended for small businesses.
The government and the ruling coalition are looking into deficit-covering bonds to fund the package. Sources say the finalizing of the package will happen as early as April.
It’s unlikely that the government and the ruling coalition will reduce the consumption tax as it the revenues from it are a major source of funding for social security spending.
Japan is still considered to be better of than the rest of the world in the face of the corona virus outbreak. At the time of writing the current total cases reported by World Health Organization (WHO) are 906 with 41 dead in a period of two months. In comparison, in Italy for almost the same period, with two weeks less, the total cases exceed 59,00 with deaths of over 5,000.
All over the world, people are advised to stay home, with businesses being forced to close with no end date. Many countries are in lockdown, gatherings of over two people in Germany are banned, in the US, New York has closed bars and restaurants and California has reinforces similar measures to restrict the movement.
Japan seems to be telling a different story. Major events have still been cancelled, schools are closed, there is talk of the Olympic games being postponed as well. However, there is no quarantine, bars and restaurants still work as usual.
There is much speculation about why Japan is taking this better than the rest of the world. One possible explanation of the drastic difference in the numbers is the older population in Europe. Italy, for example is oldest average age in Europe.
Some suggest is that less tests are administered. Japan has decided to test as needed only people with severe symptoms or people with direct contact with an ill person and isolating clusters of people before allowing a chance to spread.
Whether target testing approach is good enough to contain the outbreak in Japan will be shown soon enough. In the meantime, some schools are getting ready to reopen.
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