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Osaka business groups want permanent income tax cuts+

OSAKA, Aug. 3 Kyodo

Two major business organizations in Osaka urged the government Monday to implement permanent cuts in income and corporate taxes and to deregulate the national economy further so as to revitalize the stagnant economy.

The Japanese economy is on the verge of a crisis and a quick decision by the government is needed to overcome it, the Kansai Economic Federation (Kankeiren) and the Osaka Chamber of Commerce and Industry said in their letters presented to Prime Minister Keizo Obuchi.

Kankeiren called on the government to lower the maximum income tax rate starting next January to 50% and the effective corporate tax rate to 40% from the current 46%. They also stressed the need for economic deregulation in order to create jobs and raise liquidity in the labor market.

The Osaka Chamber of Commerce and Industry called for an income tax cut of more than 5 trillion yen. They also opposed any change in corporate taxation that would pave the way for taxes on money-losing companies, on the grounds that it would lead to an increase in bankruptcies.

At present loss-incurring companies are free from corporate taxes. Some 64% of the country's 2.4 million corporations are in the red and thereby tax-free.

The Federation of Economic Organizations (Keidanren), Japan's most powerful business lobby, has proposed a new ''corporate citizenship tax'' that would be based on a company's capital and the size of its workforce, even on loss-incurring companies, in exchange for the abolition of local corporate income taxes.

The Tax Commission, a government advisory panel on taxation, presented a report last December in favor of local corporate income taxes charged on the basis of specific standards such as capital.

But small and medium-size companies and their business groups, such as the Japan Chamber of Commerce and Industry, strongly slammed the report.
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Publication:Japan Weekly Monitor
Date:Aug 10, 1998
Previous Article:Japan to take timely, appropriate action on yen++
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