*LOL*..Hashimoto seen backtracking on Japan tax plan
[what did I tell you lisa...:-) these guys are so funny..)
Sunday July 5, 12:37 am Eastern Time
biz.yahoo.com
By George Nishiyama
TOKYO, July 5 (Reuters) - Japanese Prime Minister Ryutaro Hashimoto on Sunday said permanent income tax cuts were still just a debate, dashing world financial market hopes of swift extra measures to revive the nation's economy.
In a political embarrassment for the prime minister one week before national elections on July 12, Hashimoto was forced to put to rest campaign comments last week interpreted as meaning permanent income tax cuts were possible after the poll.
Hashimoto made the comments the day after Japan on Thursday went some way towards answering global demands for action with a plan to clear 77 trillion yen ($546 billion) of problem loans through ''bridge banks'' to take over failed institutions.
''I never said permanent tax cuts,'' Hashimoto told Television Asahi on Sunday. ''I just said we would review the tax system to make permanent reforms.''
''Of course, I don't think as a result of the reforms, we would end up with a tax rise, but I can't guarantee a tax cut, it's possible it might also be neutral,'' he added
Hashimoto, whose political survival depends on how his Liberal Democratic Party (LDP) fares in the poll, was forced into admitting the tax issue was still open under grilling by reporters and opposition leaders on television talk shows.
Although markets were briefly cheered by Hashimoto's Friday comments, they held back from a major rally, fearing they were an election ploy that would not be carried through.
Hashimoto, who denied his comments were election-related, said the misinterpretation of his remarks was because he had long held the view that tax reform was needed.
On Saturday, Foreign Minister Keizo Obuchi appeared to back up interpretations of the remarks as meaning permanent tax cuts were on the way, a view splashed on newspaper front pages.
''The prime minister himself mentioned making tax cuts permanent. He also mentioned lowering corporate taxes to global standards...we must keep a public promise made by our prime minister during campaigning,'' Obuchi said at a joint news conference with U.S. Secretary of State Madeleine Albright.
But in a comment that raised questions about disarray in economic policymaking, LDP Secretary-General Koichi said Obuchi ''misunderstood'' his prime minister's remarks.
''Mr Obuchi may have been influenced by newspaper reports and misunderstood his prime minister's comments,'' Kato told Television Asahi.
The appearance, at least, of disarray was bad news for Hashimoto as Japan heads into the last week of campaigning for a poll that will elect half of the 252 Upper House seats.
Hashimoto needs to win half of the seats -- 64 -- to keep economic policies moving and head off a LDP leadership battle.
The LDP, which has a comfortable majority in the decisive Lower House, is eight seats short of an Upper House majority which would allow swift legislation on the economy.
''The prime minister's comfort zone is 64 to 69 seats or more,'' a junior LDP parliamentarian told Reuters. ''Under 61, which is what the LDP has at present, and we could be in for political turmoil that will affect economic plans.''
If tax cuts are implemented, they would likely bring the maximum combined rate for national and local income taxes -- one of the highest in the industrialised world at about 65 percent -- down to some 50 percent, Japanese media reported.
They said two programmes were possible: a combination of two trillion yen worth of special income tax cuts for 1999 and two trillion yen worth of permanent cuts; or introduction of four trillion yen in permanent tax cuts.
However, it is unlikely the minimum taxable income would be lowered from the current 3.61 million yen as it would draw fire as benefiting the rich at the expense of the poor, they said.
''Frankly I would not be confident lowering the minimum taxable income,'' Hashimoto told Fuji Television.
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