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Current Affairs

Japanese PM proposes wealth redistribution council

Date: 18 October 2021 Tags: Miscellaneous

Issue

Japanese Prime Minister Fumio Kishida has formed a wealth redistribution council to remove income disparities and ensure social equality.

 

Background

Redistributing wealth and reducing inequality was one of the campaign promises of Kishida. The council will work towards finding ways to implement the idea.

 

Details

  • The PM has termed this as a new form of Japanese capitalism. The decision has created flutters among some Japanese investors, leading to market crash.

  • The PM is aiming to combine his ideas with those of pro-growth predecessor, Shinzo Abe to ensure that wealth moves from companies to households.

 

Members of council

The council will be headed by the Prime Minister. He will be joined by ministers and other industry representatives. The members will belong to various backgrounds.

 

Purpose

  • The focus of the council will be to start a cycle of growth and distribution. Income will be redistributed to rebuild a broader middle class.

  • Other focus of the council would be post-covid economic recovery. The policies will be formulated based on the recommendations of the council.

  • The redistribution council will replace the growth strategy council, formed by former PM Suga. Turning around economy will not be easy considering the existing situation.

 

Plan for economy

  • To aid economic recovery, Kishida has planned to spend 30 trillion yen. It will help ordinary households such as families with children, women, workers without full-time status and students. 

  • There is also a proposal to impose a 20 per cent tax on financial income, specifically focusing on the wealthy sections of the country.

  • The income-doubling plan of Kishida is very similar to an initiative launched by former Prime Minister Hayato Ikeda in the 1960s.

  • The overall plans vary from the foundations of Abenomics, which was aimed at boosting national income by increasing profits of corporate.

 

Abenomics

  • The economic and social policies undertaken by the Japanese government during the tenure of Prime Minister Shinzo Abe is known as Abenomics.

  • The policy constitutes of three pillars:  monetary easing from the Bank of Japan, fiscal stimulus through government spending and structural reforms.

  • The aim of the policy is not just economic prosperity but also acting as a counter-balance to China in the Indo-Pacific and reducing reliance on US for defence.