Due to an increased burden of fixed-asset taxes and negative effects of the April 1 consumption tax hike, the pretax profits of four Japan Railway group carriers are likely to shrink in the next business year, compared with the figures in their business plans for the current fiscal year, the four firms said Mar. 14.
According to their 1997 plans, East Japan Railway Co., Central Japan Railway Co. (JR Tokai), West Japan Railway Co. and Japan Freight Railway Co. estimate that starting April 1, their pretax profits in the next business year will decline in comparison with their initial plans for the 1996 fiscal year.
Saddled with heavy debts, Japanese National Railways was dissolved into seven JR group firms in 1987. As part of the privatization program of the now-defunct JNR, JR East, JR Tokai and JR West have for the past 10 years been exempt from paying half of their fixed-asset taxes -- worth about 60 billion yen per year. The special treatment expires at the end of fiscal 1996.