You are hereRAW Story: Japanese corporations agree to forgo tax cuts, for good of their country

RAW Story: Japanese corporations agree to forgo tax cuts, for good of their country

March 28, 2011- Hiromasa Yonekura, chairman of the Japan Business Federation, said the influential lobby would not fight the government if it decided to shelve a plan to lower the corporate tax rate, which at around 40 percent is among the highest in the industrialized world.

Economics Minister Kaoru Yosano suggested last week the government should reconsider the planned tax cut of 5 percentage points from April to prioritize spending on reconstruction and prevent the country's already massive debt pile from growing.

"I don't mind if the government skips cutting the corporate tax rate," Yonekura, who is also chairman of Sumitomo Chemical, told a regular briefing in Tokyo. "Instead I want the

government to move swiftly in its recovery efforts."

The openness of the business lobby to agree to skip the cut, may be part of a strategy to receive it in full later, analysts said.

"I think Japanese corporations would rather make sure they will get a full five percent cut next year, rather than risk having to be forced to be content with (partial) cut indefinitely," said Takuji Okubo, chief economist at Societe General in Tokyo.

The government is scrambling to come up with funding for rebuilding after a 9.0-magnitude earthquake and tsunami stuck the northeast coast on March 11, causing an estimated $300 billion in damages and crippling a nuclear power plant.

Cutting the corporate tax rate has been seen as key to boosting the competitiveness of Japanese firms, as well as an important pro-business gesture by Japan's Democratic Party.



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