The ruling Liberal Democratic Party’s economic stimulus package due out next week is unlikely to include tax incentives worth around 300 billion yen, party sources said Oct. 16.LDP officials said the package, originally to be released on Oct. 20, would be made public Oct. 21. In effect, the pump-priming plan will focus on accelerating deregulation to spur land liquidity and not tax reductions.The decision to drop tax breaks was made so that the LDP and its allies, the Social Democratic Party and New Party Sakigake, could spend more time discussing the issue, they said. The agreement was reached during a meeting between senior LDP officials and Finance Minister Hiroshi Mitsuzuka in the afternoon.It was also basically agreed there would be no special income tax cuts to the tune of 2 trillion yen, as many LDP lawmakers had wanted, because such tax reductions could only be financed by new issues of deficit-covering bonds. One LDP official said Mitsuzuka refused to give in to demands for tax reductions and that he kept reiterating the need to get the nation’s fiscal house in order, in line with the basic plan to stop issuing deficit-covering bonds by fiscal 2003. By that time, the fiscal deficit should be whittled down to 3 percent or less of gross domestic product, they said.Mitsuzuka also said a supplementary budget for the current fiscal year should not be debated during the current extraordinary Diet session but at the start of the regular session that opens in January.
LDP stimulus plan drops tax incentives