Japan Press Weekly

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2012 December 5 - 11 [LABOR]

Gov’t puts tax money into corporate downsizing

It has been brought to light that Hitachi Ltd, one of Japan’s largest makers, was given a tax reduction of 420 million yen in exchange for its downsizing plan.

Hitachi in December 2009 submitted to the industry ministry its restructuring plan to transfer 5,000 workers to its subsidiaries in accordance with the Industry Revitalization Law. After the state approved it, the registration and license tax rate imposed on the amount of the company’s capital increase was reduced by half to 0.35%. The maker in March 2012 added another 1,400 employees to be transferred.

The law allows the government to approve companies’ downsizing plans and give those corporations preferential tax and financing treatment. Basically, it encourages employers to dismiss their employees. Since the act was enacted in 1999, Japan’s big businesses have executed massive job cuts.

Panasonic Corporation also got a cut in the registration and license tax in December 2011 as its downsizing program was approved by the state. The manufacturer plans to discharge its 5,048 employees as well as transfer about 20,000 workers to its affiliates.