Reuters: US Dollar Report: UPDATE 1-Japan finmin doubts effectiveness of a corporate tax cut

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UPDATE 1-Japan finmin doubts effectiveness of a corporate tax cut Aug 15th 2013, 03:55 Wed Aug 14, 2013 11:55pm EDT * Finmin doubts immediate impact of lower corporate tax rates * Govt eyes capex tax breaks near term, corp tax cuts in long run * Sales tax decision expected by early October By Tetsushi Kajimoto and Leika Kihara TOKYO, Aug 15 (Reuters) - Cutting Japan's corporate tax rate would not have a immediate impact, the finance minister said as he suggested tax breaks for capital expenditure as one way to spark business investment which has so far lagged in an emerging economic recovery Prime Minister Shinzo Abe is nearing a decision on whether to go ahead with a planned doubling of the sales tax rate, which is intended to help contain public debt that has already exceeded 1,000 trillion yen ($10 trillion). There are concerns the two-stage hike from next April could stifle the economy just as it is picking up, and there have been calls for offsetting measures such as a cut in corporate taxes. "Given that only some 30 percent of firms pay corporate taxes, I don't think lowering corporate tax rates would have an immediate impact," Finance Minister Taro Aso told a news conference after a cabinet meeting on Thursday. There were reports this week that Abe was considering a corporate tax cut as a trade-off to ensure support for the sales tax increase. Aso, who is also deputy prime minister, said tax breaks to encourage capital spending could be considered and the government might look at other steps if the sales tax is raised. Chief Cabinet Secretary Yoshihide Suga said Abe would consult experts and the business sector before making any decision on corporate tax cuts. Abe is expected to make a final decision on the sales tax by early October. Link this Share this Digg this Email Reprints

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