TOKYO (Reuters) - Japan’s ruling Liberal Democratic Party will urge cutting the corporate tax rate while expanding the tax base in a bid to make the nation’s companies more internationally competitive, according to draft proposals seen by Reuters on Tuesday.
The LDP also said the government should lay out the timing and target of the corporate tax cut to help domestic and foreign firms in their decisions on new capital investment, employment and business development, according to the draft.
The proposals are part of a submission the LDP will make as early as this week to the government for consideration in Prime Minister Shinzo Abe’s “growth strategy” of economic structural reforms, due in June, a person involved in the process told Reuters.
Abe’s party will propose that the government consider legal changes to strengthen the governance of the $1.26 trillion Government Pension Investment Fund (GPIF), the world’s biggest.
The LDP draft also calls for adding multiple full-time committee members to GPIF’s investment board to steer a shift out of Japanese government bonds and into higher-yielding assets, according to the draft.
The proposals include promoting the creation of “super regional banks” to promote the consolidation of Japan’s 100 regional lenders.
Vice Economy Minister Yasutoshi Nishimura told a Reuters Summit on Monday the government also shared an awareness of a need for consolidation of regional banks and would want to expand the support by the public-private Regional Economy Vitalisation Corporation of Japan.
The former head of Japan’s banking regulator also told a Reuters Summit that consolidation is necessary for regional banks to survive a climate of dwindling borrowers, as it will allow them to extend riskier and therefore more profitable forms of financing.
In addition, the LDP will propose expanding Japan’s professional baseball leagues to 16 teams from 12 to energise regional economies and it calls for the government to consider support measures, the draft proposals said.
Reporting by Takaya Yamaguchi and Kaori Kaneko; Editing by Edmund Klamann, William Mallard and Richard Borsuk