The 2 trillion yen special tax cuts announced Wednesday by Prime Minister Ryutaro Hashimoto will mean roughly 65,000 yen for an average household of a married couple with two children, government sources said Wednesday.
For salaried workers, the tax cuts will appear in the form of a smaller income tax payment for February and residential tax for June, the sources said.
Finance Minister Hiroshi Mitsuzuka said in the evening that the various economic stimulus measures currently being prepared by the government and the ruling Liberal Democratic Party, including the tax cuts, would together cost the government about 5 trillion yen. The figure is the equivalent of roughly 1 percent of gross domestic product.
Apart from the income tax cuts, the figure also includes 840 billion yen in tax reductions in the fiscal 1998 budget, such as cuts in the basic corporate tax rate. In addition, roughly 1 trillion yen worth of emergency public works projects and over 1 trillion yen worth of public works spending front-loaded from the next fiscal year would be included in a supplementary budget for the current fiscal year.
Mitsuzuka also acknowledged that Japan intervened in currency markets Wednesday, saying that authorities "took action in the market to boost confidence in the yen" in accordance with the rise in trust in the economy after the 2 trillion yen tax cuts were announced.