The Conference on Fiscal Structural Reform accepted a request late April 10 by Prime Minister Ryutaro Hashimoto to revise the fiscal austerity law to include a flexibility clause, conference members said.
The conference, which Hashimoto chairs, met late April 10 to begin discussions on changing the belt-tightening Fiscal Structural Reform Law, which was enacted last year. A formal conclusion is expected around April 22.
The proposed revision is part of Hashimoto's reversal in policy, announced Thursday along with the news that he will double the 2 trillion yen in income and resident tax cuts for the current year and also implement a 2 trillion yen cut in 1999. The shift, which would put fiscal consolidation efforts on the back burner until the economy is back on track, is aimed at restoring confidence in the economy both at home and abroad.
Tax authorities said the additional tax cuts outlined by the prime minister would take the form of a set amount per taxpayer and that the additional 2 trillion yen worth for the current year could begin to take effect as early as July. The 2 trillion yen cuts would be roughly broken down into 1.4 trillion yen in income taxes and 600 billion yen in resident taxes. The 2 trillion yen in tax cuts already being implemented this year amount to 65,000 yen less in tax for an average household -- a couple and two children.
Matsunaga said that coupled with "good quality" public works spending, the tax cuts would help get the economy back on its feet. Hashimoto acknowledged that the government is working on an economic stimulus package that would exceed 16 trillion yen, with the "real water" portion coming to around 10 trillion yen -- both the largest figures ever.