• Kyodo

  • SHARE

The Diet enacted a revised law Wednesday to inject public funds into financial institutions affected by the March 11 earthquake and tsunami, as well as legislation to extend or enhance some tax breaks for fiscal 2011, including levies on smaller companies.

By relaxing some rules for injecting public money, the government aims to encourage banks and other commercial lenders in the devastated northeastern region to protect depositors and financially support small and medium-size firms struggling to keep their businesses going.

Unlike the current law, the revision allows those lenders to obtain taxpayer money without going through a strict screening process by authorities or being required to draw up plans to revamp management in exchange for public assistance.

Under the new law, to be implemented by late August, the deadline to apply for funds will be extended by five years to the end of March 2017.

The tax reform law enables the government to keep applying an eased rate of 18 percent to the incomes of smaller enterprises. Without its passage, the rate would have returned to 22 percent on July 1.

Diet approval for tax changes for fiscal 2011, started in April, had been delayed amid protests from opposition parties, which control the House of Councilors.

The opposition camp partly agreed to the government’s tax reform proposals, considering their impact on people’s lives. The proposals included expanded tax breaks on cash donations to incorporated nonprofit organizations and new discounts for companies promoting employment.

But it is uncertain whether the opposition would accept other government proposals, such as raising personal income tax, reducing corporate tax for big companies and imposing a levy on carbon emissions.

The March disaster has added pressure on the government to raise taxes to secure funds for reconstruction.

Separately, the Democratic Party of Japan-led government is finalizing the terms of its plan to raise the consumption tax from the current 5 percent when economic conditions warrant in order to help finance the nation’s swelling social security costs.

Liquidation rules

The ruling Democratic Party of Japan agreed with two opposition parties Wednesday to set up a panel in early July to iron out rules governing voluntary liquidation for victims of the March 11 Great East Japan Earthquake burdened with heavy loans, their lawmakers said.

The panel of representatives from the financial, industrial and academic worlds will meet some two times before announcing in mid-July the voluntary liquidation rules under which lenders will waive loans for insolvent housing or business loan borrowers, they said.

The government announced rules for voluntary liquidation of insolvent companies in September 2001 but has yet to apply voluntary liquidation rules to individuals.

But the DPJ, the Liberal Democratic Party and New Komeito have agreed to set up the voluntary liquidation rules for individuals as many people lost houses or business bases in the disaster with their loan repayment burdens left.

The rules will spell out how to confirm the insolvency of housing or business loan borrowers, simple loan waiver procedures through lawyers and easier steps for lenders’ booking of loan losses.

In a time of both misinformation and too much information, quality journalism is more crucial than ever.
By subscribing, you can help us get the story right.

SUBSCRIBE NOW