In the Japanese government’s neverending quest to realign the economy through tax incentives, a new proposal is about to go into effect with little fanfare. On the surface, this scheme seems both harmless and inconsequential. Starting in April, families will receive tax breaks when they remodel their homes to accommodate “three generations,” meaning grandparents, parents, and children. In order to qualify for the deduction, the renovation has to incorporate a doubling of household functions–at least one additional bathtub, toilet, kitchen, and foyer. The amount of the deduction would be equal to 10 percent of the total cost of the renovation up to a maximum of ¥250,000, which means if the total cost of the work is ¥2.5 million you get a ¥250,000 deduction, and if the work costs more you still get a deduction of only ¥250,000. Still, that’s quit a bit since this amount is subtracted from the total tax owed to the government. Moreover, if you take out a loan for the renovation, you get another tax cut for that. In addition, there’s talk about a subsidy system, much in the same vein as the subsidy system for home improvements that incorporate barrier-free functions and energy conservation measures.
What’s interesting about this scheme is that it doesn’t follow the usual Liberal Democratic Party thinking when it comes to consumer-oriented tax breaks, especially those involving homes. Usually, the purpose of such schemes is to prop up the housing market or the construction industry, but according to the Asahi Shimbun, a representative of the Housing Renovation Promoting Council said that while the council “welcomes” the tax cut and hopes it will stimulate sales, it had nothing to do with it and, in fact, didn’t know anything about it until the media reported it.
The government, specifically the cabinet office, which is handling the wording and implementation of the directive, says that the purpose of the tax break is to “reduce social welfare.” By encouraging extended families to live together the government hopes to relieve some of the burden on social welfare functions related to nursing care for the elderly and daycare for preschool children, two issues that require immediate attention.
However, the Asahi points out that the idea of tax breaks to help extended families live under the same roof has been around for a number of years, and seems to have come directly from Prime Minister Shinzo Abe himself. Formally, it’s part of his revitalization plan to get all Japanese people to work together “dynamically” for the benefit of the country, which he announced last fall to mixed reaction. While the Diet does not have to vote on it to make it a reality, lawmakers did discuss the scheme in February. The opposition said that it couldn’t find much merit in the tax plan for “boosting the birthrate,” which would seem to be the ideal end result. A scholar called in to provide an expert’s view said rather bluntly that he didn’t see how it could be effective since “most people don’t really want to live with their parents.”
Even the cabinet office might find it difficult to deny that assessment. According to a survey the office conducted prior to drafting the final tax scheme, only 20 percent of all the respondents said they wanted to live in a “3 generation” household. The portion increases with age, which makes sense since as you get older you may be more likely to want your children around to take care of you, but even for female respondents in their 70s the number who said “yes” only accounted for 30 percent of that particular demographic.
Intrigued by this seeming disagreement between survey results and policy, Asahi retraced the history of the tax cut scheme. Last October, after the cabinet was reshuffled and a new construction minister took over, he said during his first press conference that he had received an order “from the prime minister himself” to promote policies that would encourage extended family members to either live together or within close proximity to one another. The related tax plan was formalized two months later. According to the cabinet office, whose job is to “promote administration policy,” the scheme has been under consideration since 2008 because there are many people who want to raise their children “with the aid and advice of their parents,” despite the fact that the office’s own survey didn’t find that to be true.
Digging back further, the Asahi discovered even more disconnections. Tax schemes are invariably approved, and usually formulated, by the Liberal Democratic Party tax committee, one of the most powerful organs in the government, and apparently the former head of the committee, Takeshi Noda, had been indifferent to the 3-generation tax cut scheme since Abe brought it up during his first administration. Noda apparently thought it pointless and somehow wrong to use tax policy to “force a particular set of values on to families,” according to the Asahi. Over the years, however, Abe has become more determined to do just that. In a speech he gave in his home constituency of Yamaguchi Prefecture in 2014, he specifically mentioned tax reform as a means of “reducing the burden of social welfare by getting 3 generations to live together.” But in carrying out this tax policy, he implied that it had less to do with fiscal effectiveness than with wanting to “recreate the familial bonds [kizuna]” he felt were the bedrock of a healthy society.
As everyone knows, Noda was purged from the LDP in October because he didn’t want to exempt foods from the upcoming consumption tax boost, a condition that the LDP had promised to its coalition partner Komeito. With him out of the way, Abe could forge ahead with his 3-generation tax cut unhindered, but Noda’s basic objection to the plan is shared by many, and not just those in the opposition camp or people who feel it’s economically misguided.
Asahi believes that the tax scheme has problems with “fairness and neutrality.” For one thing, it only targets well-to-do families who can afford the kind of expense required to turn a single family home into a 3-generation home. The scheme does nothing to improve the living situations of lower income families, who also face major problems in terms of elderly nursing care and children’s daycare. But, of course, the 3-generation tax scheme is only one facet of the goverment’s overall welfare reform plan. What’s more insidious is that, as Abe has made clear, the scheme is a kind of first step toward recreating a social milieu that the prime minister and his ilk identify with Japan when it was, in their minds, an ideal society. One of Abe’s most trusted advisors, Tetsuo Ito, told the Asahi that the tax scheme is a way of realizing one of Abe’s goals, the resurrection of the kind of family system he idolizes from his youth and which he believes made Japan great. He wants to incorporate this belief into law and, eventually, remodel the Constitution around it. “It is an epoch-making plan,” Ito said, neglecting to mention that this belief also includes maintaining same names for couples and the somewhat outdated koseki (family registry) system, which encourages paternalism.
Asahi also points out that Abe seems to be ignoring the will of the people in this regard. In addition to the cabinet survey results, Asahi’s own survey found that when asked what they need in order to have more children, families gave “stable employment and income” as their top response, followed by “better daycare services,” “better work-life balance,” and “better labor conditions.” “Support by parents/grandparents” came in at Number 17 on a list of 20 possible answers, and when asked to choose between daycare and parental help in raising their children, families overwhelmingly chose daycare.
An interesting footnote to this story is that the “3 generation home” (sansedai jutaku) is a recent neologism coined by the government specifically for this tax scheme. Forty years ago Asahi Kasei Homes, one of the country’s first and biggest housing manufacturers, coined the term nisetai jutaku, meaning “two generation home,” to promote larger, more specialized housing for extended families. It subsequently sold 110,000 units. The LDP’s inclusion of an extra generation in the term would seem to emphasize the youngest generation. If two generations get their own separate household amenities, a third one can more easily be accommodated. Curiously, when Asahi Kasei was initially selling its nisetai jutaku, the ad copy boosted it as a way of solving the age-old “mother/daughter-in-law” frictions by giving them separate facilities within the same home and thus a means of avoiding each other. That little factoid may say more about Japan’s storied “family values” than any other.