Japanese Government Considers Bringing Tax Cuts Forward

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

18 March 2002

The Japanese Government revealed last week that it may introduce planned tax cuts in fiscal 2002, which begins in April, rather than waiting until the following financial year.

Tax reform proposals are usually compiled in December and submitted to the Diet in January, for implementation at the beginning the next fiscal year, in April. However, the Government has indicated that if the state of the Japanese economy shows signs of worsening, it is prepared to submit tax reform proposals to the current Diet session, or to convene an extraordinary session in the autumn.

Speaking at a press conference last week, Finance Minister Masajuro Shiokawa explained: 'Some tax cuts will be needed within the next fiscal year if domestic demand faces challenges and the business community presses for more cuts.'

However, on Thursday, Vice Finance Minister, Toshiro Muto announced that there were no immediate plans to compile a second package of measures to decrease inflation and spur the economy. 'We are not specifically working on compiling measures by the end of March,' he told reporters.

Measures under consideration include the implementation of an income tax cut and lower deductions for wage earners with dependents. The Government is also said to be considering moves to reduce taxes on loans to homeowners and cut tax on investment and real estate.

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