The government's Tax Commission on Friday began deliberations toward making comprehensive changes to the nation's personal and corporate income tax structure that would bring rates closer to international levels.
But Finance Minister Hikaru Matsunaga said he told U.S. Treasury Secretary Robert Rubin earlier in the week that the political situation makes it impossible to review the tax system "within one or two years" to make room for permanent income tax cuts, as Washington has suggested. Earlier this month, Prime Minister Ryutaro Hashimoto called for sweeping reviews to the nation's tax system, stressing the need for a structure that would encourage economic activity by individuals and firms.
He especially noted that he wanted to see corporate tax rates brought down to levels similar to those of other industrialized nations within three years' time. In response, the Tax Commission, an advisory body to the prime minister, agreed Friday to set up two subcommittees -- one to study personal income taxation and another to focus on reviewing corporate taxes, especially at the local level.