Japan’s ‘singles tax’ is just one battle after another

In public policy, well-meaning but complicated ideas are often undone by a catchy name.

Britain had its “bedroom tax,” the US its periodic battles over the “death tax”. Now it’s Japan’s turn, with the “singles tax” set to be imposed starting next month, part of financing for measures to boost fertility rates.

There are two substantial problems with the name, which originated on social media as a substitute for the less-catchy official term, the Child And Child-Rearing Support Contribution.

The first is that it’s not a tax, but an additional payment to public health-insurance premiums paid by all workers. The other is that it’s not levied on singles – all contributors will pay the average of 250 yen (S$2) a month, set to rise in the future, regardless of whether they have children.

It was introduced by former Japanese prime minister Fumio Kishida to pay for policies on the level of Scandinavian countries to encourage more kids, including increasing childcare availability and allowances for additional children.

But the “singles tax” moniker stuck because it has an element of truth: While everyone might pay, households with children get back far more in handouts than they put in, while the burden only grows for those without.

The name is one reason why, despite the relatively minuscule size, the scheme has attracted a surprising amount of vitriol. Some have misinterpreted it as the type of punitive tax on the unmarried attempted in Bulgaria and other countries during the Cold War. For others, it adds to cost-of-living concerns that have hit for the first time in a generation.

But the biggest problem might be that it burdens what’s now the most common type of household. In 2022, one-person homes became the largest group in the country for the first time. A combination of more people marrying later in life or not at all, and an ageing society, which leaves one member of an elderly couple alone following the death of a spouse, means one-third of all households are now occupied by just a single individual.

It’s one of the most significant changes in Japanese society in recent years.

Just a few decades ago, the most common household type was the three-generation combination of a couple, their kids, and one set of their parents (usually the husband’s). But it has been on the wane for years, familiar now to most Japanese more as the make-up of the family in the beloved anime Sazae-san, which eclipses The Simpsons for the longest-running animated show in the world, having been on the air since 1969.

And it turns out that the nuclear family was only a brief interlude. This demographic change is partly driving the government’s need for the increased revenue: Those grandparents were once free childcare, which now needs to be funded by the country.

Some have dismissed criticism as complaints from Japan’s version of the manosphere. A few English-language reports have even translated it as a “bachelor’s tax”, which is quite a stretch given that Japanese doesn’t have gendered words for singles.

We shouldn’t disregard the complaints so lightly. Few dispute the rising burden on parents and the need for policies to encourage more births, even if just to create future taxpayers. But the country’s tax and social security payments already squeeze hardest those in the lower middle-income bracket, who get the least back in return.

When Japan’s new graduates begin work in April, many will experience the shock of seeing how much is shaved from their first payslip by contributions for pensions, healthcare, income and residence taxes. Those burdens can feel the hardest on those just starting their careers, with residence tax a flat 10 per cent, and social security payments partly capped for higher incomes.

In population terms, today’s singles are ideally tomorrow’s recently married. Some 30 per cent of men and 20 per cent of women in their late 40s are unwed. The inability to put money away as savings can leave some waiting longer to marry or start families – reducing the likelihood they will have as many kids as they (or politicians) might like.

And while there’s tax relief for extremely low-income households, and birth rate policies over the past decade have made everything from after-school care to paternity leave cheaper and more accessible, the burden on single-person households has only increased.

From higher consumption tax to the cost of living, the weak yen to rising mortgage costs, it’s been one battle after another. That’s why the singles tax rankles, even though it doesn’t significantly impact take-home pay. Younger people in Japan, as elsewhere, resent the burden that’s placed on the working generation – and fear more is to come as the country ages.

I am unconvinced that any policy change will significantly move the needle on the birth rate, which is most closely correlated with greater educational and career opportunities for women.

But the solutions Japan pursues should ease the burden on younger generations, not increase it, even if that means shifting it to later in life. Lean on singles too much – or even just be seen to – and Japan might end up creating more of them. BLOOMBERG