Japan’s ruling Democratic Party will seek a reduction in corporate tax to encourage economic growth as part of its platform in upcoming upper house elections, Japanese business daily Nikkei reported yesterday.
Without citing any sources, the daily said the Democrats want to cut corporate tax in order to increase the global competitiveness of Japanese companies.
Rates charged to Japanese firms are high compared with other countries, Nikkei reported. Japan’s corporate tax is around 40 percent, about 10 to 15 percentage points higher than taxes in EU nations and countries like neighboring South Korea, it said.
The tax cut could also bolster foreign investment in Japan, Nikkei said.
The party met on Friday to finalize its platform for the election scheduled next month, Nikkei said. The Democrats must win the elections to avoid policy deadlock.
New Japanese Prime Minister Naoto Kan is expected to announce next week the party’s pledges, which will also include steps such as consumption tax reforms, the daily said.
The corporate tax cut will be the key pillar of the party’s growth strategy, but the Democrats are not expected to state the exact figure of the planned reduction, Nikkei said.
Kan, who became the new leader of the world’s second largest economy last week, has also vowed to tackle Japan’s huge public debt and is due to unveil this month a strategy consisting of both medium and long-term targets as investors fret about sovereign credit risk.
Japan will pledge to cap new bond issuance next fiscal year at the record sum earmarked for this year, Japanese National Strategy Minister Satoshi Arai said on Friday.
Arai said the government would finalize a long-term fiscal strategy framework by June 22 as Tokyo aims to rein in a public debt nearly twice the size of Japan’s GDP.
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