Japan is considering a reduction
in corporate taxes as part of a planned package to cushion
the economy from raising the national sales levy, Economy
Minister Akira Amari said.
Paring income taxes is another option, while a lower
priority, Amari told reporters in Tokyo. Prime Minister
Shinzo Abe earlier this month instructed officials to compile
a plan by the end of September to counter the blow from a
scheduled 3 percentage point bump in the consumption tax in
April, to 8 percent.
Lowering the effective corporate tax rate, which is more
than double that of Singapore, would boost Japan’s
competitiveness, while helping to offset the economic blow
from a sales-tax increase. While a reduction is backed by
industry chiefs, Abe is forecast to run into opposition at
the Finance ministry, which may be reluctant to lose revenue.
“We estimate about 4 trillion yen to be shaved off from
nominal GDP from the sales-tax increase, so we expect
stimulus measures to cover that,” said Masahiko Hashimoto,
economist at Daiwa Institute of Research Ltd., referring to
gross domestic product unadjusted for changes in prices.
Stocks Rise
Japanese stocks rose today, with the Topix index posting
its first back-to-back weekly gain since July, closing up 0.1
percent. The yen was 0.3 percent weaker against the dollar at
99.80 at 4:06 p.m. in Tokyo.
“We and the finance ministry may have a different
opinion on what our finances will allow, but in any case, we
will take the best and most appropriate policy within this
limit,” Amari said.
Cutting the corporate tax would have “a very limited
effect” as about 70 percent of Japanese companies don’t pay
the levy, Finance Minister Taro Aso told reporters today in
Tokyo.
Japan’s corporate-tax rate of 35.6 percent includes
local and national components and compares with 25 percent in
China and 17 percent in Singapore, according to the finance
ministry. Organization for Economic Cooperation and
Development data show Japan has the second-highest rate of
member nations, after the U.S. The rate is now 38 percent
because of a three-year increase to fund reconstruction after
a 2011 earthquake and tsunami.
’Main Scenario’
“Our main scenario envisages a supplementary budget of
the order of 5 trillion yen ($50 billion) or so, and although
a reduction in the corporate tax rate has surfaced as a topic,
our view is that any major cut will have to wait until fiscal
year 2015 or beyond,” Daiju Aoki, senior economist for Japan
at UBS AG in Tokyo, wrote in a Sept. 9 research note.
Abe will decide on Oct. 1 whether to increase the sales
tax to 8 percent in April from 5 percent now. He has said he
wants to take into account the strength of the economy before
making the decision.
In its monthly assessment on the economy released today,
the government said that deflation, which has stymied growth
for more than a decade, is ending and that the economy is on
the way to a recovery at a moderate pace. Consumer prices
rose 0.7 percent in July from a year earlier, the biggest
increase since 2008.
The Cabinet Office on Sept. 9 revised up its estimate of
second-quarter economic growth to 3.8 percent from the
previous quarter, after initially reporting a 2.6 percent
expansion.
To contact the reporters on this story:
Andy Sharp in Tokyo at
asharp5@bloomberg.net;
Takashi Hirokawa in Tokyo at
thirokawa@bloomberg.net
To contact the editor responsible for this story:
Paul Panckhurst at
ppanckhurst@bloomberg.net
Commercial Buildings in Tokyo
Tomohiro Ohsumi/Bloomberg
Commercial buildings stand in the Shinjuku district of Tokyo.
Commercial buildings stand in the Shinjuku district of Tokyo. Photographer: Tomohiro Ohsumi/Bloomberg
Sept. 6 (Bloomberg) — A descendent of a 16th century samurai general, Japan’s Minister for Economic and Fiscal Policy Akira Amari is on the front lines of Prime Minister Shinzo Abe’s efforts to revive the world’s third-largest economy by overturning decades-old regulations and spurring investment.
Amari is featured as a key policymaker in Bloomberg Markets’ October special issue on the 50 Most Influential People in global finance. Bloomberg’s Andy Sharp reports. (Source: Bloomberg)
Sept. 12 (Bloomberg) — Rintaro Tamaki, deputy secretary general at the Organization for Economic Co-operation Development and a former top currency official at Japan’s Ministry of Finance, talks about the Japanese government’s economic policies.
He also discusses China’s economy while speaking on the sidelines of the World Economic Forum in Dalian, China, with Stephen Engle on Bloomberg Television’s “On the Move.” (Source: Bloomberg)
Sept. 5 (Bloomberg) — Ed Rogers, chief executive officer at Tokyo-based Rogers Investment Advisors, talks about Japan’s economy, government and central bank policies, and financial market.
He speaks in Hong Kong with Susan Li and Rishaad Salamat on Bloomberg Television’s “Asia Edge.” (Source: Bloomberg)
Japan to Consider Corporate Tax Cut in Stimulus Package
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