The Japanese government and the ruling bloc have agreed to set aside about 5 trillion yen (US$50.78 billion) for measures in the government's additional economic stimulus package, The Yomiuri Shimbun learned Wednesday (October 29).

Prime Minister Taro Aso is expected to announce the package, which is far larger than the 1.8 trillion yen ($18.27 billion) plan compiled in August, at a press conference Thursday.

Key measures in the package include a total of 2 trillion yen in fixed-sum benefits to be provided to all households and the extension of a housing loan tax reduction that expires at the end of this year.

The government plans to submit a second extra budget for fiscal 2008 to cover the cost.

In the new stimulus package, the government will provide a total of 2 trillion yen in fixed-sum benefits to all households, instead of introducing a fixed-sum tax cut, which had been considered key to the package. Based on the total number of households as of the end of March 2008, each household would receive about 38,000 yen.

For the housing loan tax cuts, the government is expected to reduce income and resident taxes by as much as a total of 6 million yen per person, a record high, for people who have housing loans of 50 million yen or less. About 500 billion yen to 600 billion yen is expected to be necessary for this measure.

The government will introduce a fixed-amount expressway toll system, in which expressway users will be charged 1,000 yen on Saturday, Sundays and national holidays, regardless of the distance the driver travels on the expressway. Tolls for all kinds of vehicles, including trucks, will be reduced by 30 per cent on weekdays. The Shuto Expressway and the Hanshin Expressway will be excluded from rate reductions. About 500 billion yen will be needed to cover the cost, with the measure expected to take effect within this year and continue through the end of 2010.

The package also includes more subsidies for farmers who reduce rice paddy area and a cut in the employment insurance rate, which contributes toward unemployment benefits.

The government aims to abide by the agreement reached by the Group of Seven finance ministers and central bank governors this month on policy coordination measures for tackling the global financial crisis.

The package will also include strengthened legal measures enabling the government to provide funds to prevent the collapse of financial institutions and to prolong the expiration of preferential tax measures for stock transactions, which is set to lapse at the end of this year.

In addition, the government plans to give more credit guarantees to help small and midsize firms, which are suffering as private financial institutions are reluctant to extend loans, and provide emergency subsidies to local governments.

The government plans to cover the cost of the package with part of the reserves in the government loan and investment programme special account, from which funds are withdrawn to lend money to government-run financial institutions, and with unused funds kept for interest payments for construction bonds and other government bonds.