The splitup of Nippon Telegraph and Telephone Corp. through the formation of a holding company will not be handled by the creation of a separate taxation law, Finance Minister Hiroshi Mitsuzuka said Feb. 18.
Mitsuzuka's comments indicate the Finance Ministry's resistance to special taxation treatment for NTT, despite calls from the ruling Liberal Democratic Party, the Social Democratic Party and New Party Sakigake. Proposed revisions to the Antimonopoly Law, which the Fair Trade Commission hopes to submit to the Diet during the current session, would lift the ban on holding companies, but the tax issue is a big one for NTT. Speaking at a news conference, Mitsuzuka said the NTT issue should be handled with the entire framework of the economy in mind and not be treated as a special case. "It is an issue that would form the foundations of Japan's economic future," he said.
NTT and the Posts and Telecommunications Ministry agreed in December to reorganize the firm into one long-distance and two regional carriers all under one holding company by fiscal 1998. The long-distance carrier would eventually be allowed to enter the international telecom market. But NTT has said a precondition for the ministry's demand for it to be broken up would be the introduction of corporate taxation on consolidated, rather than individual, earnings, which is currently not permitted.