Prime Minister Shinzo Abe’s top economic chiefs have failed to agree on a contentious corporate tax cut amid lingering skepticism that the move will bolster the deflation-mired economy and amid pressure on business leaders to raise wages.
Abe, Finance Minister Taro Aso and economic and fiscal policy minister Akira Amari met Friday to put the final touches on an economic stimulus package, including the corporate tax reduction, in an attempt to soften the blow to the economy of the planned sales tax hike to 8 percent next April from the current 5 percent.
But Amari, a proponent of cutting business taxes, told reporters after the meeting that the details of the package “have yet to be decided,” indicating the three were unable to meet halfway over the issue.
Abe is eager to decrease the corporate tax rate to a level that could stoke the real economy, while Aso, who also serves as deputy prime minister, is opposed to an aggressive tax cut, given Japan’s precarious fiscal health, the worst among major industrialized economies.
At a news conference earlier Friday, Amari said the government plans to terminate, by a year earlier than planned, a special corporate tax surcharge that was introduced to finance reconstruction projects in areas wrecked by the March 2011 earthquake and tsunami.
Scrapping this surcharge at the end of fiscal 2013 next March, which will reduce the current overall tax rate of around 38 percent on Tokyo-based firms by some 2 percentage point...