LOC12:39
09:39 GMT
TOKYO, Dec 16 (KUNA) -- The Japanese government approved Thursday tax
reform plans for the next fiscal year that will lower the corporate tax by
five percentage points and introduce incentives for small businesses to boost
country's sluggish growth.
The tax reform plans, approved by the Cabinet of Prime Minister Naoto Kan,
also include the introduction of an environment tax to fight global warming.
Based on the guidelines that were proposed by the Tax Commission, a
government panel headed by Finance Minister Yoshihiko Noda, the government
will compile the budget for fiscal 2011starting next April 1 later this month.
However, the new tax legislation still requires parliamentary approval.
Japan's corporate tax rate currently stands at 40 percent, much higher than
international standards of 25-30 percent, such as 28 percent in the UK.
Kan said earlier this week this will create more jobs and attract greater
investment in Japan.
The five-point cut will result in a JPY 1.5 trillion (USD 18 billion) loss
in tax revenue, according to the panel's estimate.
To make up for reduced revenue from the corporate tax cut, the government
will raise taxes on wealthy households and fuel, but it has yet to secure
enough funding sources to implement the corporate tax cut.
"It is hard to say we've secured adequate budgetary resources," Vice
Finance Minister Fumihiko Igarashi told a news conference.
Kan has repeatedly promised to keep a cap on new bond issuance of JPY 44.3
trillion (USD 536 billion) and a spending target of JPY 71 trillion (USD 843
billion) in the next fiscal year.
The tax panel also proposed to introduce the environment tax in October
next year, in a bid to curb use of high-carbon fuels to meet the government
policy of reducing emissions by 30 percent from 1990 levels by 2030.
The levies on fuels, including crude oil, natural gas and coal, will be
raised as part of its environmental tax.
The levy for petroleum will increase by 37 percent to JPY 2,800 (USD 33)
per kiloliter in three stages through April 2015. (end)
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KUNA 161239 Dec 10NNNN