Facing pressure from within the government, Finance Minister Masajuro Shiokawa said Tuesday that the April deadline for introducing a consolidated taxation system can still be met.

"There is the possibility of introducing the system (in April) . . . and I will consult with officials (at the ministry's Tax Bureau)," Shiokawa said.

Only last Thursday, Shiokawa said introduction of the proposed consolidated tax system would be delayed by a year. It was originally to be introduced at the start of fiscal 2002 on April 1.

Shiokawa's comments last week prompted a flood of protest from other Cabinet ministers and lawmakers in the ruling coalition, saying heel-dragging by the ministry heels would hinder companies' structural reform efforts.

Takeo Hiranuma, minister of economy, trade and industry, said the system should start in April and that Japan will lose the international community's confidence in its reform efforts if it fails to do so.

Heizo Takenaka, minister of economic and fiscal policy, said: "The introduction was delayed from the current fiscal year to the next one. I hope the preparation will be completed to enable the introduction in the next fiscal year."

And Chief Cabinet Secretary Yasuo Fukuda told a Tuesday news conference he hopes the ministry will make efforts to introduce the system early.

Finance Ministry officials for their part still maintain it will be difficult to complete by the end of fiscal 2001 all the legal work necessary to push through a revision of the corporate tax system.

On Monday, Prime Minister Junichiro Koizumi also called on Shiokawa to step up efforts to launch the system at the earlier date.

Under the proposed system -- strongly supported by the Japanese business sector -- a consolidated tax would be levied on a corporate group as a whole, not individual firms in the group. Thus, losses from a firm in the group would be subtracted from profits of another group company to calculate taxable income, reducing the group's tax burden.

Shiokawa on Tuesday also said he "understood" the views of Yutaka Yamaguchi, Bank of Japan deputy governor, who said the yen should be further weakened.

"I don't reject the direction" of foreign exchange moves that the BOJ is seeking," Shiokawa told reporters, but added, "It is important to closely monitor developments in the market."

Japanese authorities conducted a series of yen-selling, dollar-buying market interventions in September to stifle the yen's rise after the Sept. 11 terrorist attacks in the United States prompted dollar-selling.

Shiokawa has said the yen's exchange rate should reflect Japan's economic fundamentals.

Pro forma tax plan

The Public Management, Home Affairs, Posts and Telecommunications Ministry has drafted a plan to impose taxes on businesses on a pro forma basis, including on their capitalization, ministry officials said.

The plan is a revised version of a scheme the home affairs ministry presented to the Liberal Democratic Party last year.

A pro forma standard tax is a corporate tax levied on the basis of nonprofit standards, including combined wages, the size of capital, the number of employees and the sum of interest paid on debts. This method enables taxes to be collected even from companies that are in the red.

The original plan called for calculating corporate taxes by combining income and a total of nonprofit standards, including wages, interest payments and rents, on a 50-50 basis.

Critics said the plan would prompt companies to step up staff cuts in order to save tax payments by reducing labor costs.

The revised plan envisages combining the amount of capital so that the size of operations would account for two-thirds of the nonprofit portion, while the remainder would consist of capital and capital reserves. The new scheme brings the ratio of wages to the calculation of taxes to less than 25 percent from 35 percent under the original plan.

The ministry intends to submit the new plan to the LDP's tax panel in the hope of introducing the pro forma standard tax in or after fiscal 2003.