Coalition eyes another stock bourse-revitalization package.

TOKYO, March 2 Kyodo

The government and ruling coalition are devising tax-incentive and other measures as an emergency package to turn around the nose-diving stock bourse and thaw the frozen real estate market, coalition officials said Friday.

The measures under consideration include scrapping a requirement that shareholders pay taxes on dividends on the grounds that businesses have already paid income taxes on profits that generate dividends, they said.

The government and coalition will also consider allowing investors to deduct any capital loss incurred in stock transactions in a given fiscal year from any capital gains they may earn in coming years, they said.

Another step to be discussed is a proposal to give a tax incentive to foreign investors, a long-time key engine of the stock market, so as to reverse their retreat from the bourse, they said.

The government will consider taking measures to increase jobs and eliminate public anxieties about job security, which has splashed cold water on personal consumption, they said.

The ruling Liberal Democratic Party plans to map out the outline of a new package of measures by the end of next week to counter the diving stock bourse and rev up the decelerating economy, they said.

The government and coalition plan to devise measures to bring forward the disbursement of public works budgets shortly after the fiscal 2001 budget clears the Diet.

Last month, the coalition announced a set of measures to reverse the falling stock market, including legislation to cut the size of large minimum investment units necessary to participate in the Japanese stock market and remove a legal curb on companies' buybacks of their outstanding shares.

But the market has since responded coolly to the package with many market participants questioning its efficacy to turn the bourse around quickly in view of the absence of any tax-incentive measures.

Speculation is growing that even greater turbulence could hit the business and financial communities by the end of March as a result of the combination of a further share fall and continuing deterioration of the economy.

On Wednesday, the government released gloomy statistics that attested to industrial production diving a real 3.9% in January from the previous month, corroborating concern that an economic recovery is being derailed.

Although the Bank of Japan responded to the dim economic outlooks Thursday with a second cut in the official discount rate in two weeks to a record low of 0.25% as well as a cut in the key money-market rate to 0.15%, it has failed to put a brake to share price slides.

The Nikkei Stock Average ended Friday at a new 15-year low of 12,261.80, the lowest level since July 31, 1985, when the main market gauge closed at 12,232.27.

Some economists warn a further slide in Tokyo share prices will deal a drastic blow to consumer psychology and further squeeze personal consumption, which accounts for 60% of the nation's 500 trillion yen gross domestic product.