Prime Minister Fumio Kishida, who places priority on wealth redistribution, has instructed ruling coalition executives to work out details of the economic package that he hopes to formalize on Nov. 2, including how to realize the income tax cut.

Legislation will be required to change the current tax system, making it likely that Japanese households, already reeling from the rising costs of living, will start feeling the benefits around next summer at the earliest.

The cash payouts could begin by the end of the current fiscal year ending March, the sources said.

Higher fuel and raw material import costs have driven resource-scarce Japan’s inflation rate higher, with its impact exacerbated by a weaker yen.

Kishida has vowed to put the economy before anything else in his policy speech as an extraordinary Diet session got underway. His increased focus on the economy comes as he is scrambling to stem a downward spiral in public support, partly seen in the mixed results of parliamentary by-elections on Sunday.

To return part of an increase in tax revenue to the Japanese people, 40,000 yen has emerged as an option within the government, according to the sources.

Japan has seen record-high tax revenue for the past three years through fiscal 2022. Of the total, income tax revenue grew by around 3 trillion yen from fiscal 2020.

The ruling coalition of the Liberal Democratic Party and its junior coalition partner, Komeito, are expected to decide how long the tax cut should last. Yoichi Miyazawa, who heads the LDP’s tax reform panel, has said one year would be “common sense.”

Komeito chief Natsuo Yamaguchi has said over 20,000 yen could be one target if the government decides to deduct a fixed amount from tax payments.

Another option to reduce income tax is to set a specific deduction rate, though it would benefit high-income earners more because tax burdens increase according to income levels.

The envisaged package would cushion the negative impact of rising prices on households and put the economy on a longer-term growth path.

The government is considering extending existing subsidies to lower gasoline prices and reduce household utility bills from the end of the year to next April.

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With the order, the church will be stripped of its religious corporation status and associated tax benefits, but can continue to exist as a group and conduct activities in Japan.

The government has judged the church has engaged in financially damaging donation solicitation, Moriyama told reporters, adding the group has been ordered by the courts to pay as much as 20 billion yen ($134 million) in compensation to around 1,550 victims.

The Unification Church has inflicted suffering on many people and violated civil law, which “deviated from the intended purpose of a religious corporation,” said the education, culture, sports, science and technology minister.

The government of Prime Minister Fumio Kishida made the decision, with a request expected to be filed on Friday, after collecting opinions at a gathering of a religious organization council within the Cultural Affairs Agency.

Photo taken on Oct. 12, 2023, shows a building in Tokyo that houses the headquarters of the Unification Church, formally known as the Family Federation for World Peace and Unification. (Kyodo)

Kishida told reporters at the prime minister’s office on Thursday that the decision relied on “objective facts” in accordance with the procedures under the religious corporation law.

The council’s members “unanimously” endorsed the proposal, Moriyama said. The Unification Church said in a statement later in the day that, “It is deeply regrettable the government has made such a grave decision based on biased information.”

The agency collected testimonies from more than 170 people as part of its investigation into the group’s solicitation of donations from followers, said Moriyama.

The Tokyo District Court is likely to deliver a judgment based on the evidence submitted by the government about the organization, founded in South Korea by a staunch anti-communist in 1954 and formally known as the Family Federation for World Peace and Unification.

The Unification Church, which stirred controversy decades ago in Japan, came under fresh scrutiny after former Prime Minister Shinzo Abe was fatally shot during an election campaign speech in July 2022 over his perceived links to the group.

Abe was targeted by the alleged killer Tetsuya Yamagami, whose mother’s large donations to the Unification Church severely impacted his family. He claimed he targeted Abe partly because Abe’s grandfather, former Prime Minister Nobusuke Kishi, helped bring the church to Japan in the 1960s.

A series of revelations about ties between lawmakers of the ruling Liberal Democratic Party, led by Kishida, and the Unification Church badly damaged the government’s reputation.

Kishida said Thursday that LDP members have “thoroughly” cut relations with the Unification Church, amid concerns that the religious organization had been trying to wield influence in the political arena.

With approval ratings for his Cabinet remaining sluggish, Kishida, who took office in October 2021, apparently aims to regain public trust by taking a firm stance against the group, often labeled as a cult by critics, observers said.

Minister of Education, Culture, Sports, Science and Technology Masahito Moriyama (C, facing camera) speaks during a meeting of the Religious Juridical Persons Council in Tokyo on Oct. 12, 2023, expressing his intention to seek a court order to dissolve the Unification Church. (Kyodo) 

Under Japan’s legal system, relevant authorities are allowed to ask courts to order a dissolution in cases where a religious corporation “commits an act which is clearly found to harm public welfare substantially.”

If the government can prove that malicious and illegal acts occurred repeatedly at an organizational level, it can seek the group’s dissolution. When that happens, it loses its tax benefits as a religious corporation.

So far, only two religious organizations have received a dissolution order from a Japanese court because of legal violations. One was the AUM Shinrikyo cult, which carried out the deadly 1995 sarin gas attack on the Tokyo subway system as well as a number of other serious crimes.

Given that it took around four months for the dissolution order to AUM to be issued following the filing of the request, the Unification Church’s case is also expected to take considerable time.

The renewed focus on the Unification Church has highlighted the difficulties encountered by “second-generation” family members of its followers, who have experienced financial and other hardships due to their parents’ devotion to the religion.

Since last November, the Cultural Affairs Agency has exercised its right to question the organization and obtain documents from it seven times, while also collecting statements from victims who were pressured into making huge donations.

Last December, Japan’s parliament enacted a law to prohibit organizations from maliciously soliciting donations.

The Unification Church has claimed that engaging in activities that violate Japan’s civil law should not be considered grounds for ordering its dissolution and that the government’s questioning of the group is illegal.

In the 1980s, the Unification Church became notorious in Japan for spiritual sales, in which followers were pressured to buy jars and other items for exorbitant prices via the use of threats, such as invoking “ancestral karma” as a catalyst for misfortune.

Moreover, the group drew attention for holding mass wedding ceremonies, with some Japanese celebrities participating in one held in Seoul in 1992. But since then, there had been few media reports about the organization until the assassination of Abe.

Some long-time members of the Unification Church said they have collected over 53,000 petitions urging the government not to pursue a court order and sent them to Kishida and Moriyama, while gathering more than 27,000 signatures online.

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Under the plan, the justice minister will be able to use discretion in granting residency to the minors, who would be subject to deportation. The government is also considering expanding the permission to their families, the sources said.

Justice Minister Ken Saito is expected to announce the change as soon as Friday.

Data from the Immigration Services Agency showed that at the end of 2022, there were 4,233 foreign nationals in Japan refusing to be forcibly deported. Of them, 201 were born in Japan and aged below 18.

Many of the affected children, who attend Japanese schools and predominantly speak Japanese, find themselves without residency. This status inhibits them from obtaining health insurance cards, thereby limiting their access to adequate medical treatment.

The current rules also restrict them from leaving the prefecture where they reside, and there have been calls to offer them humanitarian consideration.

Until now, the immigration agency had only granted special stay permissions under specific circumstances, such as when a child was born and raised in Japan and had a designated caregiver if their parents could not provide for them.

With the revision, their residence with their family will likely be allowed if certain conditions are fulfilled, including the parent not having a history of serious crime, the sources said.

Japan’s system for special permission to stay does not have clear criteria. Among those considered for it are individuals married to a Japanese national and those with children attending school in the country.

In some cases, refugee-status applicants are granted permission out of humanitarian considerations.

According to the immigration agency, during the five years through 2020, it awarded the permission to an average of 1,400 people annually.

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The request came after seven Russian banks were excluded Saturday from a key international payment network known as SWIFT. Since cryptocurrencies are not transferred via banks and restrictions vary in countries and exchanges, concerns have been growing that such currencies may be a loophole to sidestep some sanctions.

The request also came after Group of Seven leaders recently affirmed that Russia could not use such assets to elude sanctions, and it builds on Japan’s current asset freezes of Russian and Belarusian individuals and organizations.

Cryptocurrencies are already subject to Japan’s sanctions imposed on Russia to disrupt its trade and money transfers. Despite the request, it is difficult to monitor transfers conducted directly between cryptocurrency users.

The government’s call to 30 cryptocurrency exchanges not to transfer assets targets 44 Russian individuals, including President Vladimir Putin, and 10 groups.

For Belarus, which has been aiding Moscow’s aggression, 19 individuals, including President Alexander Lukashenko, and 15 organizations are subject to sanctions.

The government also asked the exchanges to step up their monitoring of crypto assets and report to financial authorities any suspicious transactions that may involve those who are subject to the sanctions.

In a statement issued on Friday, the G-7 leaders said, “We will ensure that the Russian state and elites, proxies and oligarchs cannot leverage digital assets as a means of evading or offsetting the impact of international sanctions.”

The leaders of Britain, Canada, France, Germany, Italy, Japan and the United States, plus the European Union, said they “will impose costs on illicit Russian actors using digital assets to enhance and transfer their wealth, consistent with our national processes.”

The Japanese Finance Ministry made clear in October 2020 that the law related to freezing assets covers cryptocurrencies.

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