Japan Press Weekly

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2016 July 6 - 12 [ECONOMY]

Large corporations accumulate internal reserves by taking advantage of tax cuts

The Abe government has implemented corporate tax cuts by claiming a need for economic stimulus measures. However, large corporations benefiting greatly from the tax reductions are using the reductions to accumulate their internal reserves.

Akahata recently calculated the amount of consolidated internal reserves from the 2015 financial statements. According to the calculation, Japan’s top 100 private companies increased internal reserves by 14.2 trillion yen from a year earlier.

The company with the largest increase in its internal reserves is Toyota Motor Corporation, the amount of whose retained earnings rose from 17.02 trillion yen in 2014 to 18.25 trillion yen in 2015.

It is characteristic that many companies adding to their internal reserves increased their cash deposits as well. This suggests that those corporations are saving a substantial part of the reduction in corporate taxes instead of investing in ways to stimulate the economy.

The Abe administration has carried out a corporate tax cut of four trillion yen, claiming that this would lead to an increase in capital investment and workers’ wages.