Japan Favours Tax Incentives to Corporate Tax Cuts

Japanese policymakers indicated they favor tax incentives to lift weak business investment rather than a cut in corporate taxes, as the government signaled confidence its stimulus policies had put the economy on the path to escape deflation.

In its most upbeat view on prices in four years, the government said on Thursday that Japan was approaching an end to deflation as a steady pick-up in the economy allowed more companies to pass on rising costs to consumers.

“Recent price developments indicate that deflation is ending,” the government said in its economic report for August, offering a brighter view than last month when it said deflationary pressures were easing.

Prime Minister Shinzo Abe wants to keep that momentum alive, but also needs to decide whether to go ahead with a planned doubling of the sales tax rate which is intended to help contain public debt that has exceeded 1,000 trillion yen ($10 trillion).

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency
trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza