Prime Minister Shinzo Abe’s government promised Tuesday to bolster the “earning power” of Japanese companies by cutting the corporate tax rate and promoting deregulation in highly protected industries such as health care and agriculture.
In the outline of its revised economic growth strategy to be finalized later this month, the government also pledged that it will take steps to encourage companies to share their profits with society.
A draft of the strategy is expected to be released on Monday, while that of the government’s new economic and fiscal policy blueprint for fiscal 2015 is likely to be mapped out on Friday, government officials said. Abe’s Cabinet plans to approve them on June 27 after consultations with the ruling parties.
Abe said the revised growth strategy is aimed at delivering a message that “Japan’s economy will drastically change.”
To invigorate foreign investment in Japan, the government said in the outline that it will implement “growth-oriented reform” of the corporate tax system. But it did not specify what that would look like.
The government and the ruling Liberal Democratic Party have already agreed to cut the country’s corporate tax rate in stages from the next fiscal year starting April 2015, but they are still discussing how fast the rate should be reduced amid budgetary constraints.
As for agricultural reform, the government vowed to set up organizations in a bid to boost exports of Japanese farm products, with an eye on the possible launch of the proposed Trans-Pacific Partnership down the road.
Aiming to cut back on unnecessary overtime work, the government said it will encourage the introduction of new payment systems under which workers are remunerated, not for how long they work but what they achieve.
Abe’s Cabinet, formed in December 2012, endorsed a growth strategy in June of last year. But most of the policy proposals did not break new ground and were met with disappointment, forcing Abe to draft a revised version.