Japan Press Weekly

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2013 October 23 - 29 TOP3 [LABOR]

Pushed by JCP, PM promises to urge companies to use part of internal reserves for wage hike

Japanese Communist Party member of the House of Councilors Koike Akira succeeded in having the prime minister promise that he will request companies to use a portion of their internal reserves for pay raises.

The JCP lawmaker on October 24 at a meeting of the House budget committee grilled Prime Minister Abe Shinzo on his economic policies, including a measure to increase workers’ wages and a plan to raise the consumption tax rate scheduled for April next year.

Koike criticized Abe’s assertion that cuts in corporation taxes will encourage companies to offer wage increases to their employees.

During the period between 1997 and 2012, the corporate tax burden ratio of large corporations dropped from 43.7% to 27.7%, and the average salary of their workers also dropped from 6.04 million yen to 5.56 million yen, he pointed out. Citing the fact that corporate internal reserves nearly doubled from 142 trillion yen to 272 trillion yen during the same period, Koike argued that the cut in corporate taxes ended in an accumulation of internal reserves.

Koike, who is also the JCP’s vice chair, demanded that PM Abe urge the business world to increase workers’ wages by using a portion of their internal reserves at a three-party meeting of the government, management, and labor. Abe replied, “I will ask them to do so.”

Koike also said that if the government imposes a higher consumption tax rate on the general public whose income is decreasing, it will hurt the economy and the tax revenue will not increase. As a result, the tax hike will hurt both the economy and the state finance, he added.

The head of the Cabinet in reply said, “I cannot deny that the tax hike may adversely affect an economic recovery.”

Stating that the cancelation of the tax hike is the best economic measure to take, Koike called on the prime minster to give up the tax increase plan.