The government is making arrangements for an upcoming economic package to be worth around 17 trillion yen ($112 billion), including tax cuts for households hit by rising prices and other steps to support the economy, sources familiar with the plan said Wednesday.
The size of the package, to be formalized Thursday, may increase further as consultations with the ruling coalition are under way, the sources said. A supplementary budget will be crafted for the current fiscal year to next March to fund most of the planned spending.
The package will likely be smaller than the around 35.6 trillion yen allocated for a series of steps taken last fall to fight COVID-19 and inflation. But spending will still be larger than pre-pandemic levels, which could worsen the country's fiscal health further.
Prime Minister Fumio Kishida seeks to return part of an increase in tax revenue to households amid persisting inflation. Under the current plan, the government will use around 3.5 trillion yen to implement a tax cut of 40,000 yen per person.
Over 1 trillion yen will be used to give 70,000 yen each to low-income households exempt from paying income and resident taxes.
Other measures include subsidies to lower gasoline prices and utility bills for households alongside reskilling workers as part of the government's push for more investment in human resources.
Rising prices of everyday goods have been dealing a blow to households at a time when real wage growth has not kept pace with inflation. Kishida has stressed the need for sustained pay hikes while giving people immediate support to ride out the cost-of-living crisis.
