Supplementary Income Payments (Teigaku Kyuufu-kin)

1. Introduction (1) Why I want to study this topic As an international student without paying any tax in Japan, I received 12000 yen in May as the Supplementary Income Payments (Teigaku Kyuufu-kin) from Japanese government. It is said that this policy can stimulate the economy and help the daily live in Japan. Also, as a Taiwanese, I received the consumption voucher worth about 10000 yen in 2009. In this great recession, it seems that every government tries to save the economy by the power of government and relocation of equity. However, does this really work? Will this be paid by our younger generation in the future? Will it cause inflation? And what are the differences between consumer coupon and cash? (2) Methods I will address my conclusion mainly based on the information and papers I found. Also, in order to know the point of view form people receiving cash, I conducted several interviews. The interviewees include Japanese and international students, no matter can they receive the amount money or not. 2. The history of government supplementary income in Japan (1) Regional promotion coupons program in 1999 In the spring of 1999, the Japanese government implemented the “regional promotion coupons program," or the “shopping coupon program." The “shopping coupon” worth 20,000 yen (about 200 dollars) was distributed to families for every child under the age of 15 and to roughly half of Japan’s elderly population form April 1st. The coupons expired after six months and had to be spent within the recipient’s local community. The total amount distributed was 621.4 billion yen, which represented roughly 0.12 percent of Japan’s GDP. However, based on the survey in 1999 by Economic Planning Agency, there was only 32 % of consumption raised by this program. The other 68% was saved. (2) The supplementary income payments in 2009 In January 13, the second supplementary budget for fiscal 2008 including the two trillion yen cash payout plan was passed in the Lower House by a majority of the ruling party and others.
The objectives of the Supplementary Income Payments are to support the livelihoods of residents in Japan in order to alleviate peoples’ concerns during this recession and to contribute in stimulating local economies by issuing to residents throughout Japan. Every eligible person can receive 12000 yen (However, 20,000 Yen will be issued to those at or over the age of 65 and to those at or under the age of 18) The distribution of 2 trillion yen in fixed payments for which the purpose and expected results are unknown is nothing but "a waste of taxpayers’ money." Passing the task of determining income restrictions makes the government's purpose even more incomprehensible and throwing taxpayers’ money equivalent to 0.4% of GDP for only a 0.1% economic effect (Cabinet Office calculations) is inane governance. 3. The point of view form ordinary people (1) Ms. I She is a Japanese teacher of mine in AIU. According to her opinion, at first, she didn’t like this policy. 12000 yen isn’t a big amount of money; however, the government has to spend extra money on distributing money to people. For people who want to receive 12000 yen, they have to do so much paper work and this is not convenient to busy people. However, after knowing that she can receive the money, she spent it and even much more. (2) Mr. C He is an international student in AIU. He said that he is so happy receiving money. He also spent extra money on traveling and shopping. (3) Ms. W She came to Japan this spring so that she can’t receive the money. She said that she really envied people who can receive the money. Because of the appreciation of yen against her home currency, it harder for her to live in Japan, she tried to spend less and be economical. (4) Ms. K She also came to Japan this spring. She said that even though she can’t receive the money, she still spent more after this policy. The reason why she spent more was that there were so much campaign in the shops and internet. They offer so much attractive plans which should be paid more than 12000 yen but cheaper and affordable now. For her, she spent 12000 yen to stay in a luxuries hotel in Tokyo while she traveled. 4. The consumption voucher in Taiwan (1) Introduction
The Taiwanese government distributed the shopping coupon worth 3600 new Taiwanese dollar (which is about 10000 yen) in 2009. This voucher has duration which is about 6 months. Differ from Japanese supplementary income payments; I received the money even I am studying abroad. (2) The differences between consumption voucher in Taiwan and Regional promotion coupons program in Japan | Taiwan | Japan | Time | 2009 | 1999 | Background | 1. The decline of birthrate and the increase of the elderly 2. The rise of consumption tax | Recession | Objective | Release the burden of raising children and the elderly | Expect to stimulate the economy through consumption | Issue | Central and local government | Central government | Shops where the people can spend the coupon | The shops have to register and get the allowance | Any shop | 5. Significance

We can see from these two figures that the salary was shrinking. So was the consumption. In this great recession, the stimulation of consumption was applied.
Based on the survey, there are positive and negative opinions upon this policy. There is already such a big amount of government debt in Japan. The gross government debt is at 180% of GDP, the highest for an industrial country. Where did this amount of money come from? According to the government, they used the money saved from administrative reform. However, this was also considered as one more to use the taxpayers’ money.
This kind of coupon policy may be effective in the short term. According to the result of Regional promotion coupons program in 1999, it stimulated consumption of semi-durables right after the coupons were distributed, particularly consumption of apparel and services. The MPC on these semi-durables is estimated to be 0.2-0.3 in the first month, but the estimated elasticity (and the MPC) declines to 0.1 as we consider the consumption of households over longer time periods.
The supplementary income payments in Japan and consumption voucher are just issued and applied for several months. We are not know the really effect in the long term yet but may can draw the result through the past policy. Actually, we can see form the interviews and the survey that in the short term, people received the money usually tend to spend. However, we should still concern about what they bought. If most people spend on the things used in the daily lives and save the rest of money, the economic effect is not that big. 6. References
Masahiro Hori, Chang-Tai Hsieh, Keiko Murata, and Satoshi Shimizutani “Did the Shopping Coupon Program Stimulate Consumption? Evidence from Japanese Micro Data” Economic and Social Research Institute, Cabinet Office, Tokyo, Japan 2002