Koizumi Vague On Tax Cut Programme

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

10 June 2002

Following increasing frenzied speculation as to which way the Japanese government plans to leap on tax reform, Prime Minister Junichiro Koizumi was typically vague on Friday, announcing that some taxes will be lowered, but that any tax cuts enacted must go hand in hand with reforms which will improve the country's fiscal position.

Japanese policymakers have long been divided on the issue, with key officials such as Finance Minister Masajuro Shiokawa, and the head of the government's Tax System Council Hiromitsu Ishi, calling for corporate tax cuts to invigorate the economy, and the Prime Minister advocating fiscal prudence, and the balancing of any tax cuts with increases elsewhere in order to maintain a steady revenue stream.

Mr Koizumi is expected to deliver more detail on the Japanese tax reform programme prior to the G8 summit in Canada later this month.

However, observers disappointed by the lack of specific detail provided by the Prime Minister on Friday should bear in mind that he promised little more than 'rough outlines' when he spoke to the press last week.

'We discussed certain details so that we can come up with at least the direction of tax reform,' Mr Koizumi told the Nihon Keizai Shimbun, following a cabinet meeting last Wednesday.

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