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Japan: Keidanren 'to Urge Govt to Set Corporate Tax at 30%'
Source: yomiuri.co.jp
Source Date: Sunday, September 05, 2010
Focus: Knowledge Management in Government
Country: Japan
Created: Sep 06, 2010

The Yomiuri Shimbun

The Japan Business Federation (Nippon Keidanren) likely will urge the government to reduce the corporate tax rate to 30 percent to raise the industrial sector's international competitiveness, sources said Saturday.

Nippon Keidanren also will oppose any introduction of an environmental tax, saying such new taxation would impose a heavy burden on corporations and make it difficult to secure funding for the development of new technology, according to the sources.

These proposals will be incorporated into a set of recommendations for fiscal 2011 tax reform to be submitted by Nippon Keidanren, the nation's largest business body. The recommendations likely will be finalized at a Keidanren executive meeting on Sept. 14.

According to the sources, Nippon Keidanren believes, "At about 40 percent, Japan's effective tax rate is the world's highest, forcing foreign-capitalized as well as Japanese companies to relocate their headquarters functions overseas." The proposals urge the corporate tax rate "be lowered to 30 percent as quickly as possible."

On the prospect of an environmental tax that would aim to reduce carbon dioxide emissions, the proposals state, "It would encourage companies to move their production bases to other countries and as a result, the nation's industries will be hollowed out." The proposals will urge the government to "scrap the idea of introducing a new environmental tax."

Within the government, opinions are divided between the Environment Ministry and the Economy, Trade and Industry Ministry over an environmental tax. The environment ministry insists a new such tax be imposed on oil, coal and other fossil fuels, while the economy ministry wants to raise existing tax rates on oil and coal.

Regarding the 5 percent consumption tax rate, which Nippon Keidanren has urged be raised, the recommendations urge the rate be hiked by, for example, two percentage points annually to finance growing government social welfare expenditures.
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