Prime Minister Shinzo Abe's decision to cut Japan's high corporate tax rate may trigger unwelcome side effects along with bolstering foreign investment in the country.
Earlier this month, Abe pledged to reduce the 35 percent corporate tax rate to less than 30 percent within the next few years, aiming to attain his top economic goal of conquering nearly two decades of deflation.
But Abe, who took office in December 2012, was mum about how to cover the resulting decline in tax revenues after the tax cut, sparking fears that the country's fiscal health, the worst among developed economies, may deteriorate even further.