Japanese Finance Minister Speaks Out On Tax Reform Delays

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

27 November 2001

The Japanese Finance Minister, Masajuro Shiokawa, has responded to criticism over delays in the implementation of crucial business tax reforms, blaming a manpower shortage in his ministry.

The minister came under fire last week for announcing that the government would be delaying the implementation of reforms which would allow firms to be taxed on consolidated earnings rather than parent only results, thus permitting profitable parent companies to avoid paying taxes if they were in the red on a group basis.

When the delay was first announced last week, the country's business sector was outraged, and there was speculation that the government had got cold feet over the issue, as the resultant drop in tax revenue would undoubtedly put additional strain on state finances. Economics Minister Heizo Takenaka told reporters at the time that: 'Members representing the private sector said the delay was a breach of an international pledge.'

However, Mr Shiokawa said on Monday that although the reforms will not be introduced from the start of 2002 as originally promised, he hopes to have a bill ready for parliament at the earliest opportunity, and has his eye on the end of the next fiscal year as a possible start date. 'The tax bureau is trying to prepare a bill as soon as possible,' the Finance Minister told a meeting of the Upper House Financial Committee. 'I would like to submit a bill by the end of fiscal 2002/03, but it is a bit difficult to have one ready to go with the fiscal 2002/03 budget bill.'

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