Kan's Economic Panel to Explore Corporate Tax Reduction From Fiscal 2011
Naoto Kan, Japan's prime minister
Tomohiro Ohsumi/Bloomberg
Naoto Kan, Japan's prime minister.
Naoto Kan, Japan's prime minister. Photographer: Tomohiro Ohsumi/Bloomberg
An economic panel headed by Japanese Prime Minister Naoto Kan will explore cutting the corporate tax rate in fiscal 2011 to spur growth in a stagnating economy.
Kan ordered the panel to discuss the reduction, which could make companies more competitive and attract foreign businesses to the country, according to a statement released after the group of policymakers, executives and academics met for the first time today in Tokyo.
The panel is charged with accelerating the implementation of the government’s medium-term plan for economic growth, which was released in June. At around 40 percent, Japan’s corporate tax rate is among the highest of Organization for Economic Cooperation and Development nations and lowering of the levy needs the approval of the Finance Ministry, which typically sets tax policy in December.
Chief Cabinet Secretary Yoshito Sengoku, who sits on the panel, said today that while the size of the reduction needs to be discussed, “there is room for consideration” of a 5 percentage point cut. Trade Minister Masayuki Naoshima in May urged the government to reduce it by that amount.
The statement called for changes in tax policy for the year starting April 2011 that would help generate jobs, and said relevant ministers will support businesses in selling infrastructure abroad. The government will work closely with the central bank to beat deflation, the statement said.
Stronger Yen
Briefing reporters after the meeting, National Strategy Minister Satoshi Arai said business leaders expressed concern about the strengthening yen. The currency appreciated to a 15 year-high against the dollar yesterday on concern the U.S. recovery is sputtering.
Other members of today’s panel included Naoshima, Finance Minister Yoshihiko Noda, Bank of Japan Governor Masaaki Shirakawa, Hiromasa Yonekura, head of the Japan Business Federation, and Masamitsu Sakurai, chairman of the Japan Association of Corporate Executives.
To contact the reporter on this story: Aki Ito in Tokyo at aito16@bloomberg.net
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