Finance Minister Masajuro Shiokawa said Friday the capital gains tax should be significantly reduced — although not to zero, because that would cause problems for the tax system.
Speaking at a news conference, Shiokawa also said he is ready to support the idea of increasing public funds at the state-run Deposit Insurance Corp. so they can be used for a new entity to be established to bail out insolvent debtors.
On the capital gains tax, he said, “Reducing it to zero would cause problems in various aspects. But I think the tax rate should be cut in a major way.”
Shiokawa was responding to a question about calls from the Financial Services Agency to limit the rate to 10 percent for 10 years, and from some in the business sector to freeze the tax for a few years to attract investors back to the stock market.
Shiokawa said he has yet to hear a reduction proposal from the FSA. He said he disagrees with abolishing the tax completely for a fixed period because that would create a new kind of “hollowing out” of income tax at a time when tax revenues are falling.
As for the proposed increase in public funds for the DIC, he said, “If a lot of money is needed, it means (the disposal of bad loans) is being accelerated. . . . If money is not used, you would wonder what it is doing.”
The new entity, tentatively called the Institution for Industry Revival, will be established under the DIC and will operate separately from Resolution and Collection Corp., another state-run debt collector under the DIC.
Under the government’s plan, loans to companies that have little chance of revival will be bought by the RCC, while those at firms that can be rehabilitated will be purchased by the new institution.
Details of how to finance the new entity have yet to be worked out. But a plan being floated suggests using the 12 trillion yen allocated for the RCC purchasing bad loans. The 12 trillion yen is part of the 70 trillion yen in public funds held by the DIC.
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