The Diet passed the “common number” bill May 24, paving the way for every resident, including foreigners, to be assigned a personal identification number.

Holders of the “my number” IDs will be notified around fall 2015 and they will take effect starting in January 2016.

The system will establish a network across various administrative bodies to integrate people’s financial information pertaining to taxes, pensions and medical benefits. The government says this system will streamline administrative procedures and also to make it easier for public offices to detect errors and fraud.

But at the same time, concern remains over the potential leak of personal information and identity theft, and for people lacking an address, the possibility that they will not receive vital social welfare benefits.

How did the ID number come about and why is it being introduced?

The numbering system was initially pushed in 2009 by the then-ruling Democratic Party of Japan, which argued IDs will be necessary to accurately grasp people’s financial circumstances to provide cash and tax exemptions for low-wage earners after the consumption tax is raised.

The DPJ submitted the bill to the Diet in 2012 but it was scrapped without deliberation because the party dissolved the Lower House for a December election, which it roundly lost to the Liberal Democratic Party, even though, with LDP support, April 2014 and October 2015 sales tax hikes were legislated.

Last March, Prime Minister Shinzo Abe’s LDP-led ruling coalition endorsed another bill to introduce the ID number system. The bill cleared both Diet chambers in May.

The change in government, however, brought an end to discussions of providing cash and tax exemptions to low-income earners.

The LDP-New Komeito ruling coalition’s rationale now is that the number system will serve to streamline administrative procedures and be a foundation for fair social welfare and tax systems.

What information will apply to the ID numbers?

For the time being, the information will mainly deal with social security, taxes, income, pension, welfare benefits, student loan data and disaster-related information.

The government plans to review the system in about three years after its enactment and possibly expand what it covers.

How will the new numbers benefit holders?

Currently, government organizations store the people’s tax and pension records separately. Under the new system, information will be interconnected via a network.

This will not only reduce the paperwork at public offices but make it easier to detect tax evasion and other fraud, including spotting illegal recipients of welfare benefits.

The government claims the numbering system will simplify procedures for requesting administrative and social welfare services such as pensions. For example, at present when someone applies to start receiving a pension, the application must include attached data, including a resident card and tax certificate of a spouse. These procedures won’t be necessary under the new system.

The government also plans to start operating a portal site in 2017 where people can check their social security records and obtain other useful information on the Internet. In order to have access, people need to have an IC chip embedded in their ID cards and a card reader.

After one receives an ID number from a municipality, what’s the next step?

People need to inform their employers of their ID number, which will be around 12 digits. Also, if they have a brokerage account, they will have to provide their number to the securities house for purposes of tracking income records.

People seeking to have their IC chip-embedded cards bear their photograph will have to go to their municipal office to have the card specially issued. The government hasn’t decided whether the card will be subject to fees.

How much will it cost to implement the system?

The government estimates that the initial cost will be around ¥270 billion, plus ¥20 billion to ¥30 billion a year in running costs, according to media reports.

The massive costs have led critics to argue that the numbering system only benefits the IT industry.

How will the government protect private information?

Under the new law, the government will set up a third-party independent committee to oversee allegations of data mishandling by public offices, and those who leak or sell ID information will face up to four years in prison or a ¥2 million fine.

The third party committee will consist of seven people, according to the Cabinet Office. How effective this small team can be in keeping track of ID numbers issued nationwide remains in doubt, however.

Shinichiro Umeya, a general manager of NRI’s policy system innovation department, said at a media session on June 5 that the government needs to thoroughly discuss measures to prevent leaks as well as identity theft before the system debuts in 2016.

“The system doesn’t include measures to fully prevent information leaks or ways to track how information is leaked,” Umeya said, adding the public needs to be better informed about the number system before municipalities start sending the IDs out in 2015.

“We are concerned that people will get confused at the start of the numbering system,” he said. If the public is unaware of the new system, they may throw away a municipal notice informing them of their personal number, Umeya warned.

What will happen to people who haven’t changed their residential registry to their new address, or those who have no fixed address?

Municipal governments will send the ID number to the address based on the residential registry. This means that people who have not registered their current address will not be able to obtain the number.

Those without an address, such as homeless people, may be automatically excluded from administrative and social welfare services, experts say.

The Weekly FYI appears Tuesdays. Readers are encouraged to send ideas, questions and opinions to hodobu@japantimes.co.jp