Japanese Economy Minister Hopeful Of Compromise Over Tax Reform

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

04 June 2002

At a press conference held last week following a meeting of Japan's Economic and Fiscal Policy Council, Economy Minister Heizo Takenaka revealed that policymakers hope to reach an agreement on the best way to stimulate the country's economy before Prime Minister, Junichiro Koizumi attends a G8 conference in Canada later this month.

Mr Takenaka told reporters that although there are still disagreements within the government over whether fiscal austerity (the Prime Minister's preferred course of action), or tax cuts (the option favoured by Finance Minister, Masajuro Shiokawa) are the way forward, there are hopes that a compromise can be reached before Mr Koizumi faces a grilling at the G8 meeting.

According to reports, Japan's public debt is forecast to reach 140% of gross domestic product (GDP) by next March.

'In principle, we agreed on the need to regain fiscal health, but also on the need to rejuvinate the economy through tax policy,' Mr Takenaka revealed on Thursday, explaining that: 'If we cut some taxes we must raise taxes elsewhere, and when it comes to setting such details there is a slight difference of opinion about the feasibility.'

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