Describing the state of the economy as “extremely bad,” Prime Minister Ryutaro Hashimoto said Oct. 3 the government will cut corporate tax rates and accelerate the decontrol of land transactions to give it new life.A comprehensive package of such measures will be worked out and announced by the end of the month, government officials said. Earlier in the day, Hashimoto urged members of his Cabinet to swiftly draft the new measures. “I must say the economic figures (released recently) are extremely bad. The industry has lost confidence in the future of the economy,” Hashimoto said in a speech to chief editors of nationwide Kyodo News member companies.He said he plans to reduce corporate tax rates, while also ending some tax-exemption measures and changing the land-related tax and legal systems to encourage the selling and buying of land plots, deals in which have come to a virtual halt as the economy weakens. Any such economic package, however, is expected to lack measures that would require an additional fiscal burden — such as income tax cuts and increased public works spending — because the government has made it clear that its priority will be on reducing its fiscal deficit.Both the government and the Liberal Democratic Party are now looking into such options as increasing land liquidity, accelerating deregulation and revising the corporate tax system in an effort to prop up the economy. The LDP hopes to draw up a package by Oct. 20.During an informal Cabinet meeting the same day, Hashimoto said every minister must make the utmost efforts to work out new measures to boost the economy, which he said seems to lack vitality, the ministers said in separate news conferences. Hashimoto still insists that the economy is recovering in general, but also asked his ministers to hasten work to compile deregulation plans for areas under their jurisdiction. The prime minister said deregulation constitutes an important part of economic structural reform — one of his policy priorities.Hashimoto made the requests to Cabinet members in the wake of the Bank of Japan’s release of the latest “tankan” quarterly survey of business sentiment, which showed that confidence in the economy is weaker than expected. The tankan also indicated business conditions may worsen.Hashimoto told the Diet on Oct. 2 that his government will draft new measures to revamp the economy by the end of this year. He was responding to criticism from the opposition camp that his administration has failed to act properly to ensure economic recovery.
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