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Tax panel to set up group to study corporate tax cut

JIJI

The Tax Commission has decided to set up a new study group for discussions on a proposed cut in the effective corporate tax rate.

The government commission made the decision because Prime Minister Shinzo Abe is eager to help big business.

Starting next month, the study group will discuss issues related to the proposed rate cut, including economic effects and how to cover a fall in revenue. Former economic and fiscal policy minister Hiroko Ota will be named head of the group.

The Abe administration plans to include an outline of corporate tax reforms in its new economic and fiscal policy guidelines to be compiled in June.

Tax Commission Chairman Minoru Nakazato said at a news conference Thursday that the commission wants to clarify key points in the reforms by the time the administration draws up the guidelines.

Many members of the commission called Thursday on the administration to lower the effective corporate tax rate to boost Japanese firms’ international competitiveness.

Some called for reviewing existing breaks, including those for specific industries, to secure funds to cover expected revenue falls after the corporate tax cut.

Japan’s effective corporate tax rate will be 36 percent in fiscal 2014, higher than the roughly 25 percent rate used in other major Asian countries.

Private-sector members of the Council on Economic and Fiscal Policy are calling for lowering the tax rate by some 10 points.

The tax system research commissions of the ruling Liberal Democratic Party and New Komeito plan to soon begin talks on corporate tax system reforms.