TOKYO, June 12 (Reuters) - Japan’s ruling Democratic Party will seek a reduction in corporate tax to encourage economic growth as part of its platform in upcoming upper house elections, Japanese business daily Nikkei reported on Saturday.
Without citing any sources, the daily said the Democrats want to cut corporate tax in order to increase the global competitiveness of Japanese companies.
Rates charged to Japanese firms are high compared with other countries, Nikkei reported. Japan’s corporate tax is around 40 percent, about 10 to 15 percentage points higher than taxes in EU nations and countries like neighbouring South Korea, it said.
The tax cut could also bolster foreign investment in Japan, Nikkei said.
The party met on Friday to finalise its platform for the election scheduled in July, Nikkei said. The Democrats must win the elections to avoid policy deadlock.
New Prime Minister Naoto Kan is expected to announce next week the party’s pledges, which will also include steps such as consumption tax reforms, Nikkei said.
The corporate tax cut will be the key pillar of the party’s growth strategy but the Democrats are not expected to state the exact figure of the planned reduction, the daily said.
Kan, who become the new leader of the world’s second largest economy last week, has also vowed to tackle Japan’s huge public debt and is due to unveil this month a strategy consisting of both medium- and long-term targets as investors fret about sovereign credit risk. [ID:nTOE65702H]
Japan will pledge to cap new bond issuance next fiscal year at the record sum earmarked for this year, National Strategy Minister Satoshi Arai said on Friday. [ID:nTOE65909A]
Arai said the government would finalise a long-term fiscal strategy framework by June 22, just days before a summit of G20 leaders in Toronto, as Tokyo aims to rein in a public debt nearly twice the size of Japan’s GDP.
Reporting by Chikafumi Hodo; Editing by Paul Tait