Japan Business Leaders Oppose Tax Reform Delay

by Mary Swire, Tax-News.com, Hong Kong

23 November 2001

Japan's most influential business leaders have criticised a delay in the introduction of corporate tax reforms during a government economic panel meeting yesterday (Thursday). Finance Minister Masajuro Shiokawa had said earlier that the ministry would delay the reforms, which would allow firms to be taxed on consolidated earnings rather than parent-only results. Originally scheduled to take effect next year, the new tax system would enable profitable parent firms to avoid paying taxes if they were in the red on a group basis.

However, once the ministry had calculated that the reforms would cost around 800 billion yen (US$6.49 billion), it was decided to put them on hold. After the meeting, Economics Minister Heizo Takenaka told reporters: 'Members representing the private sector said the delay was a breach of an international pledge.'

Meanwhile, Prime Minister Junichiro Koizumi and his two coalition partners have agreed to a 2.5 trillion yen second budget to enable Koizumi to fulfill his aim to limit the issuance of government bonds and complete structural reform plans.

Koizumi said: 'Under current economic conditions, some measures should be taken. I want to put together a second supplementary budget to prevent the economy from tumbling into a deflationary spiral.'

Recommended