With the House of Representatives election over and the roster for the policy panel of the ruling coalition set, discussions on tax reform for the next fiscal year have finally gotten under way -- half a month later than average. I would like to mention some points we would like to emphasize on this issue.
In recent years, the corporate tax system has been changed in ways that have improved the competitiveness of Japanese firms -- the effective corporate tax rate is lower, consolidated taxation was introduced, tax breaks are encouraging large research and development projects, and tax cuts are being granted to promote information and technology investment. As a result, the total tax burden on Japanese corporations, which stood at roughly 60 percent in 1995, has dropped below 50 percent.
The biggest factor was the effective corporate tax rate, which sank from 49.98 percent to 40.87 percent.