JAPAN-Nikkei-Time to go back up? Message Board

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Strategies & Market Trends : JAPAN-Nikkei-Time to go back up?

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To: chirodoc who wrote (789)	3/23/1998 9:12:00 AM
From: chirodoc	Read Replies (1) of 3902

Monday March 23, 6:56 am Eastern Time Japan's LDP snuffs out hopes for income tax cut (releads with LDP's comment on plan to exclude income tax cuts) By George Nishiyama TOKYO, March 23 (Reuters) - Japan's ruling Liberal Democratic Party (LDP) on Monday blew out the last flicker of hope for hefty income tax cuts in an economic stimulus package to be announced this week -- but left open the possibility of such cuts in 1999 and beyond. LDP secretary-general Koichi Kato told a news conference that a meeting of party executives had agreed to exclude income tax cuts from its ''large-scale'' economic package, which will feature public works spending and special tax breaks. ''We will consider revising taxes for calendar 1999 and beyond. This includes income tax cuts,'' Kato said. Funding substantial income tax cuts would require deficit-financing bonds, the issuance of which must be trimmed under a fiscal reform law passed last November which Prime Minister Ryutaro Hashimoto has made a key pillar of his economic platform. Most senior LDP members have been cautious about implementing large income tax cuts, but Kato said there was still room for discussion on tax cuts for policy purposes. He said steps to be included in the party's package would not require a revision of Japan's fiscal reform law, adding supplementary budgets and the issuance of construction bonds were not bound by the law. LDP policy chief Taku Yamasaki -- who has said the package will be worth more than 10 trillion yen ($76.9 billion) -- said on Sunday that the steps to be unveiled by Friday would include public works spending on telecommunications, the environment, education and welfare, as well as on more traditional infrastructure projects such as roads and bridges. Yamasaki said they would also include special purpose tax cuts and steps to address financial institutions' bad loan woes, but added that he was opposed to permanent tax cuts. Hopes for income tax cuts were fanned over the weekend when Upper House LDP lawmaker Masakuni Murakami said on television that tax cuts were needed to stimulate growth. Party executive Yoshiro Mori was quoted by domestic media as saying on Saturday he would consider discussing with other political parties tax cuts over a span of several years. Japanese authorities are under heavy pressure at home and abroad to take drastic steps to stimulate an economy that has stagnated for most of the past seven years and now appears to be sliding into its first recession in more than two decades. Japanese business groups want corporate as well as income tax cuts, while the United States -- growing ever bolder with what Tokyo sees as unsolicited and unwelcome advice -- has called for real stimulus worth up to two percent of Japan's gross national product. Washington has also hinted it favours tax cuts as well as ''cost efficient'' public works spending.

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