Japan PM keen to cut corporate tax rate - chief cabinet secretary

Sat Feb 15, 2014 6:01am EST
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By Linda Sieg and Yuko Yoshikawa

TOKYO (Reuters) - Prime Minister Shinzo Abe is determined to cut Japan's corporate tax rate, Chief Cabinet Secretary Yoshihide Suga said, a step experts say could boost the global competitiveness of Japanese companies and make the country more attractive to foreign investment.

Suga, who serves as the government's top spokesman and is one of Abe's most trusted aides, also said Japan's participation in talks on a U.S.-led free trade pact, the Trans-Pacific Partnership, was a vital part of Abe's growth strategy, the "Third Arrow" in his "Abenomics" policy that also includes hyper-easy monetary policy and fiscal spending.

"The prime minister has made a definite statement regarding a reduction in the corporate tax rate," Suga told Reuters in an interview. "We want to achieve this."

Finance ministry officials have expressed concern that cutting the corporate tax rate, considered high by global standards at about 35 percent for national and local taxes combined, would worsen the public debt, which is already the worst among advanced nations.

But Suga said: "Whatever the finance ministry says, the government policy will not change. We will consider what will happen to government finances if the corporate tax rate is lowered, but the prime minister has said all along that a reduction is necessary. We want to do that properly."

Abe took office in December 2012 pledging to revive the economy and end the deflation that has plagued it for a decade and a half.

Suga said that nearly 14 months later Japan was on track to escape deflation.

"Without a doubt, we have been able to create the atmosphere such that we can escape from the deflation that has continued for 15 years," he said.   Continued...

Japan's Chief Cabinet Secretary Yoshihide Suga speaks during an interview with Reuters in Tokyo February 15, 2014. REUTERS/Yuya Shino