By Richard Johnstone | 12 September 2013
A senior Japanese minister has revealed that the government is planning to introduce a number of changes to the tax system as part of the country’s reform plan.
Yasutoshi Nishimura, senior vice minister of the Cabinet Office of Japan, told a World Economic Forum meeting that the country was likely to increase the nation’s consumption tax to offset a reduction in corporate tax.
Since Prime Minister Shinzo Abe took office in December 2012, a series of reforms have been put in place to boost the economy and tackle deflation in the country.
Speaking in a session at the WEF’s annual meeting of ‘new economic champions’ in Dalian, China, Nishimura said that, now Abe’s Liberal Democratic Party controlled both houses of the parliament, further reforms would take place. The LDP won elections to the upper house earlier this year.
Abe would now ‘follow through’ on his commitment to introduce fiscal measures and structural reforms, including revisions to the tax system, Nishimura said. As well as tax reforms, this is expected to also include the creation of special economic zones similar to those that drove China’s growth, which would likely be subject to looser regulation.
‘We aim to speed up restructuring to make Japanese economy and society more globalised,’ he added.
At the meeting, a number of senior business figures backed the changes, known as Abenomics, which have been put in place so far. They include higher government spending and quantitative easing.
Among the speakers who welcomed the impact of the reforms was Mitsubishi Corporation board chair Yorihiko Kojima. He said they had ‘created the environment to reverse the chronic deflationary trend of the Japanese economy’.
Kojima added: ‘It is more about people’s expectations that the Japanese government is finally committed to real economic change.’
However, he said further structural reforms were now needed.
‘We in the business community are waiting for concrete measures by the government this autumn,’ he said. Once these are announced and implemented, ‘the true test of Abenomics begins’, Kojima added.
