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Thursday, April 1, 2010
Ins, outs of new child allowance
The child allowance law giving parents ¥13,000 per child per month takes effect Thursday, the start of fiscal 2010, as the Democratic Party of Japan fulfills one of its key campaign pledges.
Foreign residents who have lived in Japan for more than a year are entitled to the money regardless of where their children live, even if overseas.
Boasting that the allowance will help families raise their children, the DPJ aims to double the amount to ¥26,000 per child next fiscal year.
However, how the government will pay for the subsidy has yet to be worked out.
Following are some key questions and answers on how the new system works:
Who gets the child allowance?
Fathers or mothers who live in Japan and take care of children aged 15 or younger qualify.
If children don't have parents or their parents are unable to take care of them, their legal caretakers receive the money on their behalf.
For children in orphanages, special housing and other facilities funded with public money, the managers of such facilities won't receive the child allowance. Instead they will get the same amount of money from a separate fund called the Child Relief Fund under the management of the welfare ministry, according to Shigeki Yumoto, an official at the Equal Employment, Children and Families Bureau of the Health, Labor and Welfare Ministry.
What is the procedure for receiving the money?
Starting this month, municipalities will mail out application forms to households with children. Applicants will send back the forms and, if necessary, other documents to prove their children live overseas.
The first payments won't come until June, but the application deadline to receive the money for April and May is Sept. 30, so parents will be able to get the allowance retroactively.
How is the new child allowance different from the old one?
The new "kodomo teate" (child allowance) replaces the "jidou teate" (student allowance) that lasted decades.
Under the new child allowance law, ¥13,000 will be given to parents per child until they finish junior high school, whereas the old allowance only covered children through elementary school.
The amount is now bigger as well, as the old allowance was ¥5,000 for the first and second child each and ¥10,000 for the third child and beyond to parents with income below a certain level.
There is no income cap for receiving the new allowance, while the old program had a limit of roughly ¥5 million to ¥6 million depending on the number of children and whether the recipients were self-employed or worked for a company.
Yumoto said that even with the income cap, the old subsidy covered about 90 percent of families raising children.
Why is there no income cap under the new law?
The child allowance is meant to help all the families with children, regardless of their parents' income, Yumoto said.
Who finances the child allowance?
The central government and municipalities.
If recipients work for companies and are enrolled in social insurance and their children are up to 2 years old, employers also bear part of the burden.
For children aged 3 to 12, the central government covers roughly half the allowance and municipalities fund the rest.
For children aged 13 to 15, the central government picks up the entire tab.
About ¥2.25 trillion will be used for the child allowance in fiscal 2010.
When will parents receive the subsidy?
Local governments will move the money for April and May into recipients' bank accounts in June. The June-September allowance will come in October and the October-January segment will be paid in February.
For next February and March, the allowance will be paid next June. The timing is the same as that for the old allowance.
How can Japanese and foreigners prove they are caring for children living outside Japan?
They will have to submit documents proving they support the offspring financially, Yumoto said.
For that, they will have to submit documents such as birth certificates and certificates of school enrollment, he said. They will also have to submit bank transfer certificates to prove they sent money to their children, or photocopies of passport stamps to indicate they have made personal contact with their children, he added.
Is there anything controversial about the new program?
Local governments can only refer to documents submitted by applicants as proof of the existence of children, and thus there is a risk of falsified documents getting by.
"Local governments have no way of really confirming if foreign applicants have children in their home countries. That means if foreigners submit false documents, the system makes it possible for them to make lots of money," said Mitsushige Yamanaka, mayor of Matsusaka, Mie Prefecture.
The city will receive ¥7.6 billion from the central government to finance the child allowances, of which about ¥100 million is meant for foreigners who have children outside Japan, Yamanaka said.
Pointing out that the amount the city will receive from the central government is about the same as revenue from the residential tax — about ¥7.7 billion — Yamanaka also said the city could use the money in a better way.
"Currently, there is a problem of children waiting to be accepted in nursery schools. But it costs ¥300 million to build and open a nursery school. With ¥7.6 billion, we can build 25 new nursery schools," Yamanaka said.
He also brought up the increase in clerical work for municipalities.
Yumoto said the ministry is aware of the bigger burden on municipalities, but the child allowance is the best way to benefit low-income families because the rate of increase in disposable income for those families will be higher than that for rich families.