Japan’s Ruling Party Agrees to Cut Corporate Tax Rate in 2015

Prime Minister Shinzo Abe and his ruling Liberal Democratic Party’s tax panel agreed Tuesday to cut Japan’s corporate tax rate from fiscal 2015 on condition the government continues making efforts to restore the country’s precarious public finances.

Earlier in the day, Finance Minister Taro Aso also voiced his acceptance for the first time of implementing corporate tax cuts from the fiscal year starting next April if financial resources can be secured to cover a possible decline in tax revenues.

With Japan’s relatively heavy corporate tax rate by international standards becoming virtually certain to be reduced, the focus will turn to how fast the government will cut the rate down the road and whether it can really come up with alternative tax revenues.

After a meeting between Abe and executives of the LDP’s Research Commission on the Tax System, its chairman, Takeshi Noda, said the premier urged the panel to decide with economic and fiscal policy minister Akira Amari how to describe the corporate tax change in the government’s policy blueprint for fiscal 2015 to be released this month.

Noda also told reporters after the meeting that he put pressure on Abe to consider how to make up for a decrease in tax revenues, apparently suggesting his reluctance in reducing Japan’s corporate tax rate unless the government pledges to promote fiscal rehabilitation.

“We shouldn’t give priority to corporate tax cuts if they provide only short-term benefits,” Noda said.

via Mainichi

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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