Japan Press Weekly

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2014 March 19 - 25 [ECONOMY]

Domestic firms attracted by strong overseas demand, not by tax cuts

The national government and business circles have repeatedly claimed that Japanese companies will relocate overseas unless corporate taxes are cut further. However, a recent survey conducted by the government itself refutes this claim.

According to the Cabinet Office’s survey on domestic companies’ activities in 2013, the largest number of respondents (50.8%) cited the “strong demand in markets” as the reason for starting overseas operations. It was followed by “cheaper labor costs” (19.1%).

In contrast, none of those respondents singled out as the reason that some type of preferential treatment is given by foreign governments, including corporate tax breaks.

In order to prevent domestic firms from leaving Japan, it is vital to boost domestic demand. The Japanese Communist Party has argued that the state should direct big businesses to use part of their huge amount of internal reserves for increasing workers’ wages in a bid to encourage domestic consumption.

Past related article:
> End unfair taxation system: JCP Sasaki [February 4, 2014]