Japan Press Weekly

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2020 June 10 - 16 [POLITICS]

Corporate internal reserves should be used to maintain jobs and support contractors during COVID-19 crisis: expert

Amid the coronavirus pandemic, a task facing Japan is to overcome the negative impact on people’s livelihoods. In order to achieve this, the government needs to take aggressive fiscal action. Former Komazawa University professor Oguri Takashi, who specializes in accounting, in an Akahata interview on June 11 proposed that the huge internal reserves accumulated in large corporations be utilized as financial resources for government measures to counter the coronavirus emergency.

At present, the amount of internal reserves maintained by all Japanese corporations has reached 463 trillion yen. Of the money, 234 trillion yen are held by large corporations with a capital of more than one billion yen.

Oguri pointed out that major businesses, however, are reluctant to use their internal reserves, and said that this may be because of their interpretation of the Companies Act that only shareholders can claim the right to retained earnings and thus this money can be used only for dividend payments.

The former university teacher said, “However, as an emergency measure to help people survive the corona-triggered economic crisis, it is necessary to allow large corporations to use their internal reserves to meet social demands, such as 100% wage payments to regular workers, job security for non-regular workers, and financial aid for small contractors and suppliers. This will also lead big businesses to fulfil their social responsibilities.”

Oguri pointed out that the government already began discussion on ways to recover finance resources after the current health disaster is brought under control which include an increase in the income and corporate taxes and the imposition of a higher tax on assets of the rich. He said that the government should also consider putting a levy on corporate internal reserves.

Oguri pointed out that to levy a 20% tax on the 234 trillion yen in big businesses’ internal reserves, for example, will enable the government to obtain 47 trillion yen in tax revenues. He continued to say that together with a temporary taxation of the rich, the government can collect tax revenues of more than 50 trillion yen in total.

Oguri stressed, “It is necessary for us to change the economic system from the current one based on neoliberalism to a people-oriented one after the coronavirus situation comes under control. In this regard, the creation of a framework for the utilization of corporate internal reserves is important.”

Past related article:
> Large corporations record highest profits by refusing to pay better wages to workers [November 9, 2019]