Tokyo: The Japanese government plans to use reserve funds set aside in its fiscal 2023 budget to finance measures included in a planned economic package, according to a copy of the package reviewed by Jiji Press on Monday.

The economic package will include an income and resident tax cut worth around 3.5 trillion yen, or 40,000 yen per person, a key measure aimed at cushioning the impact of rising prices. The government plans to adopt the package on Thursday, people familiar with the matter said.

Reserve funds set aside to fight the COVID-19 pandemic and inflation will be reduced from the original amount of 4 trillion yen and used as a financial resource for the economic package.

The reduction comes after the government said in June that it will bring back the size of its spending that has ballooned during the pandemic to normal. The reduced funds will also be used to support efforts by businesses to raise wages.

Reserve funds worth 1 trillion yen for measures aimed at addressing the economic fallout of the war in Ukraine will also be reduced and used for the economic package.

The income and resident tax cut, set to start in June next year, is a temporary measure aimed at addressing a situation in which wage growth cannot keep up with inflation, according to the economic package.

The package will also include a plan to increase the amount of benefits paid to each low-income household to 100,000 yen.

JIJI Press