TOKYO, Dec 6: Japan’s Prime Minister Junichiro Koizumi pledged on Thursday not to raise taxes to make up for revenue shortfalls.
I would like to review wasteful expenditure rather than to hike taxes, Koizumi said.
I am not thinking of special tax hikes, he said in an interview with the Nihon Keizai and Sankei newspapers, which other media could listen to.
There has been argument over whether the government should raise taxes on popular low-malt beer and cigarettes. A higher tax on the liquor, called “happoshu,” triggered heated debate as its lower tax rate has enabled brewers to sell it much cheaper than regular beer.
Koizumi also said there would be “no change” to the government’s plan to introduce in April 2002 a system guaranteeing up to 10 million yen (80,650 dollars) of deposits per account in the event of a collapse of a financial institution.
Some senior ruling party politicians have called for the limited guarantee system to be delayed in case its introduction itself sparks fears of collapse and runs on deposits at weak banks.
He also dismissed the possibility of injecting fresh public funds into banks to reinforce their capital bases and help get rid of their huge bad loans.
Japan’s forward-looking index of economic activity sank to its lowest level in over three and a half years in October, the government said on Thursday.
The leading index for the next three to six months dropped to 14.3 points from a revised 27.3 points in September, the Cabinet Office’s economic and social research institute said.
The 50-point mark is regarded as the dividing line between growth and contraction in the economy. It is the fifth month in a row in which the index has been below 50.
The reading was the lowest since March 1998, when it registered 9.1 points.
The leading index is based on a raft of financial figures which offer a pointer to the future of the economy, such as commodity indices, new car registrations and the number of new home building projects.
It may be due to temporary factors but basically this is not a very good figure, said Junji Kimura, the Cabinet office official in charge of the index.—AFP