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Abe vows to slash corporate tax, primary budget deficit

JIJI

Despite delaying the consumption tax hike, Prime Minister Shinzo Abe said his administration will stick with plans to begin lowering the effective corporate tax rate in fiscal 2015.

“There is no change” in plans to slash the corporate tax rate to less than 30 percent over several years starting from fiscal 2015, Abe said in an interview Saturday.

Japan’s effective corporate income tax rate, consisting of national and local taxes, stands at around 35 percent, compared with 25 percent in China, 24 percent in South Korea and 17 percent in Singapore. Only around 30 percent of Japanese firms pay corporate tax, with the rest exempted due to poor business performance.

As for the House of Representatives election he has called for Dec. 14, Abe reiterated he would declare it a triumph if his ruling Liberal Democratic Party-Komeito coalition wins a simple majority of 238 seats.

In addition to his economic policies, Abe said he expects one of the key issues for voters will be his Cabinet’s July decision to change the government’s traditional postwar interpretation of the pacifist Constitution and lift a ban on Japan’s use of collective self-defense.

“There will be no administrative vacuum” because of the poll, Abe said.

Last week, Abe announced he will postpone the sales tax hike by 18 months, until April 2017. The increase would see the rate rise to 10 percent from 8 percent.

He meanwhile said his government will continue work to halve the primary budget deficit as a percentage of gross domestic product by fiscal 2015, compared to the fiscal 2010 level. Abe added that he “aims to increase tax revenues by revitalizing the economy.”

He said that he hopes to compile a fiscal 2015 budget soon and pass it by the March 31 end of the current fiscal year, despite fears that the general election could hamper this goal. Referring to a proposed fiscal 2014 supplementary budget, Abe said it will include subsidies aimed at spurring consumer spending.

On whether to decommission Tokyo Electric Power Co.’s Fukushima No. 2 nuclear plant, a move requested by the prefecture, which also hosts the crippled No. 1 plant, Abe said he would carefully weigh the issue.

He also attempted a pitch for his government’s plan to restart Kyushu Electric Power Co.’s Sendai nuclear plant in Kagoshima Prefecture, to try to win over a highly skeptical public. The Abe government has vowed to restart nuclear reactors once their safety is confirmed. In September, the Nuclear Regulation Authority concluded that the Sendai plant’s No. 1 and No. 2 reactors meet stringent new safety standards.

On Okinawa Prefecture’s Nov. 16 gubernatorial elections, Abe acknowledged the election of Takeshi Onaga, who opposes building a replacement facility for U.S. Marine Corps Air Station Futenma within the prefecture. Still, Abe stressed that his administration will proceed with the planned base transfer as per a years-old bilateral agreement with the United States.

“This is the only solution” to maintaining U.S. military deterrence while removing the dangers posed by the Futenma base, which is currently situated in a residential neighborhood of the city of Ginowan, he said.

Okinawan residents have long called for reducing the burden of hosting U.S. forces as much as possible. “I will continue making efforts in order to gain local understanding,” Abe assured.