Prime Minister Ryutaro Hashimoto indicated Thursday that he opposes income and residential tax cuts above the 2 trillion yen already announced.Speaking before the House of Councilors’ Finance Committee, Hashimoto said he was aware of calls from business leaders and opposition parties for a greater reduction in income taxes to help stimulate the economy.But he said any additional cuts could damage fiscal reconsolidation efforts. Newly formed parliamentary group Minshu Yuai Taiyo Kokumin Rengo, which comprises six opposition parties that formed from the breakup of Shinshinto, is demanding tax cuts to the tune of 6 trillion yen. “But in any case, we need to consider how these cuts would be financed, and if the money is to come from deficit-covering bond issues, it might undermine the foundations of our fiscal reform efforts,” Hashimoto said in response to questions from Liberal Democratic Party lawmaker Tatsuo Shimizu.Hashimoto noted that at present, Japan’s tax burden was relatively low compared to European industrialized nations, and that such points also need to be taken into account when discussing tax reductions.As to the possibility of extending the 2 trillion yen tax cuts to fiscal 1998 and beyond, the prime minister said it was more important to take steps to boost the economy so that such an extension would not be necessary. The cuts are in the supplementary budget for the current fiscal year.On the recent weakening of the yen against the dollar in foreign currency markets, Hashimoto expressed concern and reiterated the government’s position that authorities were prepared to act appropriately to stabilize the exchange market.The opposition calls for additional cuts also drew criticism from Vice Finance Minister Takeshi Komura, who said that business circles had been demanding cuts only in corporate taxes, rather than income taxes, as recently as up to last month.The government intends to reduce corporate tax rates beginning in fiscal 1998. “The government has done all it can (by drawing up the 2 trillion yen tax cut package,) and business leaders should now focus on vigorous management instead of calling for additional measures when the state budget is already set for submission to the Diet,” Komura said.
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