As part of its growth strategy, the administration plans to introduce a set of tax breaks to encourage companies to purchase new equipment and help hospitals and inns make their buildings more resilient to earthquakes.
By also taking measures to bolster Japan’s industrial competitiveness, such as regulatory reforms, Prime Minister Shinzo Abe will try to encourage industrial reorganization, considered key to revitalizing the deflation-mired economy, administration officials said Thursday.
The Liberal Democratic Party and New Komeito started to flesh out the details of the tax breaks at a meeting of their tax panel Thursday, confirming they will finalize tax reform policies, focusing on the growth strategy, at the end of next month.
In its economic growth strategy approved in June, the administration set a target of increasing total business investment by 10 percent during the next three years to bring it up to around ¥70 trillion, equivalent to the level before the 2008 global financial crisis.
The Abe administration will submit a bill on tax reform to the extraordinary Diet session this autumn, the officials said.
While policymakers are eager to map out steps to shore up domestic demand, a government panel held its fourth day of hearings Thursday to hear opinions from experts regarding the scheduled hike in the consumption tax, which many fear will stifle consumer spending and investment, dragging down the economy, at least temporarily.
Nine people, including Saga Gov. Yasushi Furukawa, participated in the meeting and exchanged views mainly on the impact of the consumption tax hike on regional economies.
Akira Banzai, president of the Central Union of Agricultural Cooperatives, proposed that the administration lower the tax rate on food and agricultural products when the consumption tax is raised.
The government panel, which began hearings Monday, will hear from a total of 60 people from a variety of sectors. It is holding daily sessions through Saturday and will report to Abe in early September before he decides whether to implement the tax hike.
Under legislation enacted last year, the 5 percent consumption tax is scheduled to be raised in two stages, to 8 percent next April and to 10 percent in October 2015, to cover swelling social security costs.