(Reuters) - Japan’s government announced an economic stimulus package on Tuesday worth $50 billion or more to cushion the economy from the blow of raising the national sales tax.
Following are some points of the programme, meant to support growth in the short term while curbing Japan’s huge public debt over time. The programme was announced by Prime Minister Shinzo Abe.
- The government will raise the sales tax to 8 percent from 5 percent in April, the first major fiscal reform since 1997.
- The stimulus package, worth about 5 trillion yen ($50.96 billion), will include some 1 trillion yen in tax cuts.
- The government will also decide in December whether to end a special corporate tax for earthquake reconstruction in April, a year earlier than planned, which would save companies 900 billion yen. This would effectively cut the corporate tax liability for a big company in Tokyo to 35.6 percent from 38.0 percent.
- Companies boosting their spending on factories and equipment will get a total of 730 billion yen in tax breaks in the fiscal year starting April 1.
- A tax break for companies that raise wages will be expanded by 160 billion yen.
- A tax break for home buyers will be expanded by 110 billion yen.
- The draft plan does not mention cutting the corporate tax rate, but parties in the ruling coalition separately agreed to consider the issue “promptly”.
- The plan includes public works spending for the 2020 Tokyo Olympics, which has been estimated at 1 trillion yen.
Reporting by Tetsushi Kajimoto; Editing by William Mallard, Neil Fullick and Richard Borsuk