With eye on corporate tax cut, Keidanren OKs new chief

Kyodo, Staff Report

Keidanren appointed Sadayuki Sakakibara as the new chairman of the country’s most powerful business lobby on Tuesday.

The business lobby, also known as the Japan Business Federation, approved the nomination of Sakakibara, chairman of fiber and textile maker Toray Industries Inc., at a general meeting. Sakakibara has been outspoken in his belief that the government should begin reducing the corporate tax rate starting in fiscal 2015.

“Whether we can lead the economy to a real growth path depends on the government’s and the business circle’s efforts for the next few years,” Sakakibara said at his inaugural news conference.

“The key to Japan’s (economic) recovery lies in innovation,” he added. “Innovation of technology is the lifeblood of resource-poor Japan to strengthen its international competitive edge. It would serve as the biggest engine for Japan’s growth.”

The 71-year-old former engineer was tapped in January to succeed Hiromasa Yonekura as Keidanren chief.

The government hailed the move, with Chief Cabinet Secretary Yoshihide Suga praising Sakakibara work at Toray.

“Manufacturing is crucially important for Japan,” Suga said at a news conference earlier in the day.

Sakakibara joined the company in 1967 after graduating from Nagoya University’s graduate school of engineering. After assuming the Toray’s presidency in 2002, he became its chairman in 2010.

He also served as vice chairman of Keidanren from 2007-2011, and most recently became a private-sector member of a government panel discussing measures to boost the competitiveness of Japanese industries.

In a recent interview, Sakakibara expressed hopes that Prime Minister Shinzo Abe would “pave the way as soon as possible for reducing (the corporate tax rate) to 25 percent” and begin slashing the rate “in the next fiscal year.”

The tax rate currently stands at around 35 percent for companies based in Tokyo, a level that ranks among the highest of major developed nations. The rate has fueled concerns that it has handicapped Japanese firms in the global business arena.

Later this month, Abe is expected to unveil his latest strategy for boosting the nation’s economic growth, which is likely to include a cut to the corporate tax rate.

The new chairman also said the Japanese economy is overcoming the impact of the April consumption tax hike to 8 percent from 5 percent. He said the additional tax hike to 10 percent in October 2015 is “essential” — despite fears of adverse effects on household and business spending — given the need to restore the country’s fiscal health.

He suggested that Keidanren would back Abe’s economic policies on beating back chronic deflation, raising the possibility that the business lobby would review its current policy of refraining from promoting political donations by companies.

Sakakibara added that he considers it a “top priority” to improve Japan’s ties with China and South Korea.