Japan's corporate taxes should be reduced to attract foreign businesses and persuade domestic companies not to shift operations overseas, a former economic minister who heads a government corporate tax committee said.

Even after the yen's 20 percent decline versus the dollar over the last two years, some companies aren't convinced it's cost-effective to keep their factories in Japan, said Hiroko Ota, 60, now a professor of economics at the National Graduate Institute for Policy Studies.

"We must tax more widely and thinly in order to generate corporate competitiveness," Ota, the minister of economic and fiscal policy from 2006 to 2008, said in an interview Monday. "Lowering corporate taxes would reduce business costs and could prompt companies to select Japan as the base for their operations."