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Prime Minister Ryutaro Hashimoto gave indications Friday that a permanent income tax cut may be included in the tax system reforms the government is soon expected to begin working.

“I expect reforms of the tax system to be started on a permanent basis rather than in a temporary tax cut. I think this step will come about,” Hashimoto reportedly said during a news conference in Kumamoto.

Hashimoto is in the midst of his campaign for the House of Councilors election to be held July 12, but his remark had an immediate impact on the Tokyo Stock Exchange and the yen. The Nikkei 225-issue index has made a sharp rebound this week, marking its eighth consecutive day of rise Friday and ending the session up 39.66 points at 16,511.24. The dollar, which had dropped to the 138 yen range during midafternoon trading, finished at 139.23-25 yen, against 139.17-20 yen on Thursday in Tokyo.

Chief Cabinet Secretary Kanezo Muraoka denied some media stories that said Hashimoto spoke about the potential tax cuts in response to “gaiatsu,” or foreign pressure, to implement stronger financial steps for reviving the stalled economy.

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