Corporate tax cuts, stronger corporate governance and closing the tax gap between one- and two-income households are among the Liberal Democratic Party’s recommendations for inclusion in Prime Minister Shinzo Abe’s economic growth strategy, due by the end of next month.
The LDP, which met Tuesday to discuss the recommendations, will submit its draft to Abe later this month, a source close to the matter said.
The Cabinet is likely to approve this year’s growth strategy on June 27 after reviewing the recommendations from the LDP and other government councils.
The LDP draft outlines “seven pillars,” including improving the governance of companies, reforming public funding, utilizing foreign labor, promoting entrepreneurship and more women in the workforce, and revitalizing local economies.
The LDP is pushing for corporate tax cuts to woo foreign investment and create jobs. At 35.64 percent, Tokyo’s is one of the highest in the world, but no lower figure was specified. While some government officials are concerned about the lost revenue — each percentage point reduction equals some ¥400 billion lost — the party is also recommending that the tax base be expanded to offset the cuts.
The party is also calling for stricter corporate governance. It wants to require that public-listed companies have at least one independent outside director. Companies that fail to comply would be forced to explain why at shareholders meetings. The majority of board members are deeply entrenched in the companies they oversee, and thus have little incentive to challenge management.
Getting women into the workplace is a crucial goal of “Abenomics.” To that end, the LDP wants to level the tax rates for single- and double-income households.
Currently, households with stay-at-home housewives get bigger tax breaks. The health care and public pension premiums for those wives who make less than ¥1.3 million a year are covered by their husbands. The men also get an annual tax waiver of ¥380,000 if their wives earn less than ¥1.03 million. Some critics say the system encourages women not to earn beyond these thresholds.
The LDP also wants to introduce tax breaks for double-income households that utilize housekeeping or baby-sitting services to promote an environment that enables mothers to work. The limited number of openings at day care centers is one of the reasons women find it so hard to work full time. Many families cannot afford the high cost of hiring private baby sitters.