INTERVIEW-Japan DPJ: not decided if will give up corp tax cut
Fri, 25 Mar 2011 10:29 GMT
By Linda Sieg and Yuko Yoshikawa
March 25 (Reuters) - Japan's ruling Democratic Party (DPJ) has not decided whether a planned cut in corporate income tax by 5 percentage points should be put off to help fund reconstruction after the March 11 earthquake and tsunami that devastated northeastern Japan, DPJ Secretary General Katsuya Okada said on Friday.
"Everything must be the target of review, but what to do about the corporate tax has not been decided," Okada told Reuters in an interview. "It is very important for the revitalisation of the economy."
Economics Minister Kaoru Yosano said earlier in the day that the government might need to reconsider its plan to cut the tax rate from April 1, given reconstruction needs. At around 40 percent, the effective tax rate for Japanese companies is higher than in most major economies.
Okada declined comment on a proposal by main opposition Liberal Democratic Party leader Sadakazu Tanigaki to introduce a temporary tax hike to fund reconstruction, and declined comment on the effectiveness of the proposal.
Okada also said there was no discussion of a suggestion that the Bank of Japan help the government by taking up a big issue of emergency bonds, adding such a measure would risk a loss of fiscal discipline.
Okada said the possibility of a broad coalition with the LDP had not disappeared, despite LDP chief Tanigaki's rejection of a recent offer by Prime Minister Naoto Kan to join the cabinet as deputy premier for disaster reconstruction.
"To decide whether to join a coalition requires a major decision and (LDP) President Tanigaki was not able to make that big decision at that time," Okada said.
"But we do not know what will happen from now on. There is an atmosphere of cooperation to overcome this huge disaster," he added. "The possibility has not gone away."
"Decision-making could become faster (in a coalition), but there are various views inside both parties." (Reporting by Linda Sieg; Editing by Michael Watson)
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