Japan’s ruling parties on Thursday adopted tax reform policies for fiscal 2014, putting off a decision on when to lower the tax rate on daily necessities to cushion the impact of the sales tax hike to 10 percent the following fiscal year.
But Prime Minister Shinzo Abe’s Liberal Democratic Party and its coalition partner the New Komeito party agreed to increase taxes on company workers and car owners in an effort to restore Japan’s fiscal health, the worst among developed nations.
In contrast, the ruling camp decided to provide tax breaks for the corporate sector to strengthen the “Abenomics” policy mix, indicating the difficulty of achieving a balance between economic revitalization and fiscal consolidation.
Takeshi Noda, chief of the LDP’s tax panel, said at a press conference that the ruling bloc hammered out the tax reform plan with a determination to tackle the big challenge of beating nearly two decades of deflation.
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