Calls For Securities Tax Revamp In Japan Intensify

by Carla Johnson, Investors Offshore.com

01 October 2002

Writing in the Japan Times on Monday, Senior Managing Director of the Japan Business Federation, (or Nippon Kiedanren), Yoshio Nakamura urged the government to make radical changes to the way in which stockmarket transactions and investment income are taxed, in order to assist the country in extricating itself from a 10 year economic slump.

Warning that individual investors have become increasing confused with regard to securities-related taxation, Mr Nakamura explained:

'The stock market's decline over the past decade has prompted the government to make a series of changes to the securities tax and take special measures to promote investment. However, these measures have only resulted in making the securities tax extremely complicated - too complicated, in fact, for the average potential investor to understand.'

The Kiedanren official went on to argue that in order to address the situation and stimulate interest in the Japanese stockmarket, the government should radically simplify the securities tax regime, and should then order a review of the entire income tax structure over the medium to long-term.

'Without being constrained by past policy decisions, the government should immediately and radically simplify the taxation of capital gains from stocks or introduce special measures for tax exemptions on a temporary basis,' he suggested.

Mr Nakamura concluded by urging Prime Minister Junichiro Koizumi to make a bold decision on these proposed reforms, and not to allow changes to wait for the annual tax reform season at the end of the year. However, with so many other decisions still pending regarding the forthcoming tax cutting package, a swift resolution to this appears unlikely.

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