TOKYO: Japanese Prime Minister Shinzo Abe is expected on Tuesday to unveil a fresh round of reforms to boost a nascent growth recovery, reports said, his second attempt at launching the “third arrow” of his economic action plan.
In a package that has already been heavily trailed, he will promise to slash Japan’s
corporate tax rate—one of the world’s highest—and tackle other sectors long protected by
government help, according to local media.
The prime minister and his economic and financial ministers are expected to formally adopt the plans before an official announcement is made in the afternoon.
Company taxes, including a rate of 35.6 percent in Tokyo, are the second-highest in the Organization for Economic Cooperation and Development behind the United States, a factor some critics say has held back the economy.
Abe is facing calls to make good on the final tranche of his growth action plan, dubbed “Abenomics,” which started in early 2013 with a huge public spending spree and an unprecedented monetary easing campaign by the Bank of Japan.
That gave the economy a shot in the arm and set off a stock market rally as firms’ profitability grew on the back of a sharply weaker yen.
But there are growing complaints that as the sugar rush of cheap money wears off, the lack of real structural reform could prove problematic block for an economy that has stumbled through more than two decades of disappointment.
Local reports say the package to be announced later in the day will include deregulation of sectors including medicare and agriculture, which are both heavily protected at present.
There will also be proposals to revise an out-dated law prohibiting dancing after midnight, Japan’s public broadcaster NHK said.
Abe’s much-touted first attempt at a package of structural reforms fell flat last summer, with critics saying they were too timid at taking on Japan’s many vested interests.
This year, the premier also faces a delicate balancing act as ordinary citizens struggle with lacklustre wage growth and rising prices for everyday goods—the result of Tokyo’s bid to stoke long-absent inflation as well as April’s consumption tax hike to 8.0 percent from 5.0 percent.