November 14, 2015
Akahata editorial (excerpts)
Prime Minister Abe Shinzo, in a new policy package dubbed “three new arrows” which is the “second stage” of his “Abenomics” economic policy, will set a target of increasing Japan’s GDP to 600 trillion yen. To attain this target, the Abe government is considering further reducing the corporate tax rate.
During a recent meeting of the government Council on Economic and Fiscal Policy, Abe said that he wants to move forward to cutting the rate to less than 30% from the current 32% by fiscal 2016.
Companies in the red, in the first place, do not have to pay the corporate tax, so those who will benefit from further tax cuts will be mostly large corporations and business circles such as the Japan Business Federation (Keidanren) who have been seeking more corporate tax breaks.
To reduce effective corporate tax rates by 1% requires about 500 billion yen. The Ministry of Finance says it will try to secure necessary financial resources by expanding the size-based taxation system, which is currently levied only on large corporations, to small- and medium-sized enterprises.
However, this will become another tax burden for smaller businesses. While planning to impose on the general public an additional 2% increase in the consumption tax rate (currently at 8%), the government intends to provide more tax breaks to large corporations. Given this situation, the government can hardly expect to gain public understanding of extra cuts in the corporate tax.
As a result of the three years of the Abenomics economic scheme, large corporations made record-high profits and increased their retained earnings or savings and cash on hand. In sharp contrast, workers’ wages remained restrained. Accordingly, consumer spending also remained stagnant.
Between FY 2012 and FY 2014, the amount of current profits and internal reserves in large corporations went up by 16.1 trillion yen and 49.9 trillion yen, respectively. Meanwhile, the amount of employees’ salaries rose by only 0.3 trillion yen. Even Finance Minister Aso Taro pointed out that further corporate tax cuts will most likely only help to accumulate cash reserves in major companies.
The “trickle-down” theory has already proved to be a failure in the “first stage” of Abenomics. The Abe administration should shift to warming up the household economy and adopt policies to improve people’s livelihoods.
Past related article:
> Abe’s empty promises about ‘new three arrows’ cannot fool public [September 27, 2015]
Prime Minister Abe Shinzo, in a new policy package dubbed “three new arrows” which is the “second stage” of his “Abenomics” economic policy, will set a target of increasing Japan’s GDP to 600 trillion yen. To attain this target, the Abe government is considering further reducing the corporate tax rate.
During a recent meeting of the government Council on Economic and Fiscal Policy, Abe said that he wants to move forward to cutting the rate to less than 30% from the current 32% by fiscal 2016.
Companies in the red, in the first place, do not have to pay the corporate tax, so those who will benefit from further tax cuts will be mostly large corporations and business circles such as the Japan Business Federation (Keidanren) who have been seeking more corporate tax breaks.
To reduce effective corporate tax rates by 1% requires about 500 billion yen. The Ministry of Finance says it will try to secure necessary financial resources by expanding the size-based taxation system, which is currently levied only on large corporations, to small- and medium-sized enterprises.
However, this will become another tax burden for smaller businesses. While planning to impose on the general public an additional 2% increase in the consumption tax rate (currently at 8%), the government intends to provide more tax breaks to large corporations. Given this situation, the government can hardly expect to gain public understanding of extra cuts in the corporate tax.
As a result of the three years of the Abenomics economic scheme, large corporations made record-high profits and increased their retained earnings or savings and cash on hand. In sharp contrast, workers’ wages remained restrained. Accordingly, consumer spending also remained stagnant.
Between FY 2012 and FY 2014, the amount of current profits and internal reserves in large corporations went up by 16.1 trillion yen and 49.9 trillion yen, respectively. Meanwhile, the amount of employees’ salaries rose by only 0.3 trillion yen. Even Finance Minister Aso Taro pointed out that further corporate tax cuts will most likely only help to accumulate cash reserves in major companies.
The “trickle-down” theory has already proved to be a failure in the “first stage” of Abenomics. The Abe administration should shift to warming up the household economy and adopt policies to improve people’s livelihoods.
Past related article:
> Abe’s empty promises about ‘new three arrows’ cannot fool public [September 27, 2015]
