Bank tax not applicable in other sectors, panel says

The tax base for the Tokyo Metropolitan Government’s controversial bank tax could not apply to an across-the-board local corporate tax, an advisory panel to the prime minister said Friday.

Gross sales profits in nonbank industries would be inappropriate as a tax base because they do not accurately reflect the value of business activity, said Hiromitsu Ishi, head of a Tax Commission subpanel.

The subpanel on local business tax reached the conclusion during the day’s meeting, Ishi told reporters.

The subpanel has been reconsidering the idea of an across-the-board local business tax, following the surprise announcement in February by Tokyo Gov. Shintaro Ishihara to tax banks only. It had already suggested in July four possible options as tax bases, such as the aggregate salaries of each firm.

Like Tokyo’s bank tax, the suggested across-the-board tax would be levied according to company size rather than profits, therefore taxing even firms in the red.

The Tokyo Metropolitan Assembly passed the bank-tax plan Thursday as banks were poised to sue the metropolitan government for what they consider unfair taxation.

The tax will be levied on gross profits of banks with available funds of 5 trillion yen or more. In nonbank sectors, gross sales profit corresponds to banks’ gross profit.

But accounting rules are different in nonbank sectors. Gross sales profit deducts some important elements of business activity, such as labor costs or salaries for blue-collar workers at factories.

In the case of banks, it does not matter because they incur no labor costs, explained Ishi, who is also president of Hitotsubashi University.

Bank trio to ax jobs

Sanwa Bank, Tokai Bank and Asahi Bank will cut their combined workforce by nearly 30 percent to help maximize the effect of their planned integration of operations, bank officials said Friday.

The three banks, which will integrate operations under a holding company in April 2001, will cut around 10,000 personnel by the end of March 2006 from their combined workforce of roughly 37,000 as of March 31, 1999, the officials said.

The cuts are steeper than the 7,000 that Dai-Ichi Kangyo Bank, Fuji Bank and the Industrial Bank of Japan had previously mentioned in plans to integrate their operations into the Mizuho Financial Group.

The cuts revealed Friday are also larger than the 9,300 jobs that Sumitomo Bank and Sakura Bank plan to eliminate by March 2004 under their merger plan.

Sanwa, Tokai and Asahi will also combine some 150 branches by the end of March 2006.