Freshman Lawmaker Who Ran Tully's Coffee in Japan Urges Corporate Tax Cut
Former Tully’s Coffee Japan Co. President Kota Matsuda, who was elected to parliament this month, said the country must cut corporate taxes to attract investment or risk losing out to Asian rivals.
“The Japanese government is not too friendly to companies, enterprises and entrepreneurs,” said Matsuda, one of 10 members of the fledgling Your Party to win seats in the upper house of parliament. “The corporate tax is very high in Japan; it’s over 40 percent. Many of my friends who own and manage public companies are considering moving out of Japan soon. That’s a very big risk.”
The 41-year-old lawmaker said in an interview last week that he will bring unique business skills to parliament as Japan struggles to sustain economic growth and reverse more than a decade of falling prices. He brought Seattle-based Tully’s Coffee to Japan in 1997, building it up to become the No. 2 specialty outlet after Starbucks Coffee Japan Ltd.
Matsuda said the business tax rate should first be cut to 25 percent and eventually 20 percent.
Yasunori Sone, a political science professor at Keio University in Tokyo, said Matsuda’s experience as a chief executive officer will be useful in policy decisions while his success in business doesn’t guarantee political achievements.
Overall Pictures
“CEOs tend to have the ability to see overall pictures and figure out what to cut and what to focus on,” said Sone in a phone interview today. “But he’s in a small opposition party, and doing politics is more difficult than running a coffee business.”
Your Party, formed less than a year ago, has said it is willing to work with Prime Minister Naoto Kan’s ruling Democratic Party of Japan on some policies, while ruling out a coalition. The DPJ failed to obtain an upper-house majority in the July 11 election, meaning it may need opposition support to pass legislation.
Your Party plans on using its “leverage” to push the government and the Bank of Japan to set an inflation target of 2 percent, party head Yoshimi Watanabe said in a July 14 interview. The party opposes Kan’s efforts to raise the national sales tax from 5 percent.
Senegal, Boston
Matsuda, who grew up in Senegal and the U.S. before attending university in Japan, slept on the floor of the first Tully’s in Tokyo’s Ginza district for six months. When he took the company public in 2001, the stock doubled from the initial offer price to 320,000 yen. Ito En Ltd. in 2006 spent 4.8 billion yen ($54.7 million) to buy a controlling stake.
Japan trails China, South Korea and Hong Kong in luring foreign companies, Matsuda said. He said he was asked to move Tully’s headquarters six years ago by Singaporean officials who pledged to further reduce taxes. Japan’s corporate rate of about 40 percent compares with an average of 26 percent within the Organization for Economic Cooperation and Development.
“I’m probably the one and only person who has the experience of taking a company public” in parliament, Matsuda said. “I’d like to bring the view of how average Japanese are thinking, and bring that thinking to negotiations, and talks with other politicians.”
Watanabe’s Your Party supports lower company taxes and trimming the number of bureaucrats in Japan by one-third.
Prejudice
Matsuda moved with his family to Senegal for his father’s work when he was five and learned to speak French at the local kindergarten. He remembers being labeled as Chinese by kids at the time. He moved to Massachusetts in 1979, playing soccer and graduating from Lexington High School outside Boston. Returning to Japan, he faced some prejudice for not being Japanese enough at Tsukuba University, northeast of Tokyo.
“My African and American friends used to make fun of me for eating raw fish,” Matsuda said. At college, “my friends said I was different because I was a returnee.”
Approached earlier this year by Your Party lawmaker Keiichiro Asao to run for office, Matsuda initially declined.
“My honest reaction was no,” he said. “After I talked with him a few times, I thought I should be a politician to first reform Japan. I’m not too proud of Japan’s situation right now.”
With parliament set to begin its new session tomorrow, Matsuda says his atypical upbringing may prompt fellow legislators to regard him as slightly odd.
“If people look at me that way, maybe I can use that to my advantage to bring about more drastic change,” he said.
To contact the reporters on this story: Sachiko Sakamaki in Tokyo at Ssakamaki1@bloomberg.net; Takashi Hirokawa in Tokyo at thirokawa@bloomberg.net
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