Japan to decide on corporate tax cut by year-end

TOKYO, Sept. 9 Kyodo -
Prime Minister Naoto Kan on Thursday asked a new economic panel to determine by
the end of year whether Japan should cut corporate taxes to help boost growth.
Kan also said he plans to introduce a range of tax incentives in the next
fiscal year starting in April 2011 to create new jobs.
Kan said, ''In a bid to enhance companies' competitiveness and attract foreign
firms,'' Japan needs to reach a conclusion on the issue of whether to cut its
effective corporate tax rate of about 40 percent to the levels of other
industrialized countries in the process of designing tax reforms for the
upcoming fiscal year.
The first meeting of the panel aimed at finding the best way to implement
Japan's new economic growth strategy adopted by the Cabinet in June was joined
by Bank of Japan Governor Masaaki Shirakawa and other representatives from
business, labor and academia.
The committee, headed by Kan, got down to business as the government prepares
to announce a fresh stimulus package on Friday in an attempt to keep the
economy on a recovery track by creating jobs and encouraging consumer and
business spending amid rising fears over the rising yen and falling stock
prices.
In addition to stimulating domestic demand, Kan said Japan needs to do more to
deepen ties with fast-growing economies in Asia.
Kan said the government will come up with more measures to assist Japanese
companies trying to tap into big overseas infrastructure projects.
The panel on growth strategy was launched ahead of the Democratic Party of
Japan's presidential election next Tuesday. Kan, also head of the ruling party,
is seeking reelection as DPJ leader and thus Japan's prime minister in what is
seen as a close race against his sole opponent Ichiro Ozawa, a longtime
powerbroker.
If Ozawa wins the Sept. 14 election, it remains uncertain whether the course
set out Thursday for the panel's future discussions would stay intact.
In Japan, the process of designing a budget and a tax framework for each fiscal
year normally concludes in December.
Under the growth strategy, Japan aims to achieve an annual real economic growth
rate of 2.0 percent on average over the next decade and create 5 million jobs
in such areas as green technology, health care and tourism, among other
objectives.
The strategy also says that the country's effective corporate tax rate should
be reduced to the levels of other major economies, which are standing at around
25-35 percent.
While business circles and the industry ministry are supportive of slashing the
rate, the Finance Ministry has been somewhat reluctant about the envisaged
reduction due to concerns over a further fall in tax revenues.
Other panelists include Finance Minister Yoshihiko Noda and other relevant
members of Kan's Cabinet, Japan Business Federation Chairman Hiromasa Yonekura,
Japanese Trade Union Confederation President Nobuaki Koga and Keio University
President Atsushi Seike.
==Kyodo