Japan Eyes Tax Cuts to Boost Capital Spending

Tokyo, Nov. 10 (Jiji Press)–The Japanese government discussed Monday a draft outline of key measures under a proposed comprehensive economic package, featuring a plan to promote private-sector capital investment in 17 sectors through new tax incentives. With the move, the government aims to encourage Japanese companies to continue investing aggressively despite the negative effects of high tariffs imposed by U.S. President Donald Trump. The matter was discussed at the first meeting of the government’s new growth strategy panel, established to achieve a strong economy. Prime Minister Sanae Takaichi, who chairs the panel, said, “We’ll hold further discussions based on bold ideas that are not bound by conventional systems.” Emphasizing that the country will aim to create demand through government procurement and regulatory reform, particularly in areas related to the defense sector, she instructed ministers to take swift action to begin working on measures even before the economic package is finalized. Under the draft outline, the government plans to introduce a bold tax system to promote investments, in line with the expansion of a tax incentive program that allows companies to deduct a portion of their investments from corporate taxes. The government also aims to create a better environment for private companies to invest through tax reduction measures and by allocating funds from multiyear budgets. For the 17 sectors designated by the government as priority investment areas, such as artificial intelligence and shipbuilding, the government will provide support measures, including formulating plans for technological innovation and increasing funding. According to the draft outline, the government will compile a basic plan by the end of the year to promote technological innovation and address risks in the AI field amid intensifying development competition. It also said that the government will draw up a road map to revitalize Japan’s shipbuilding industry. The draft also includes plans to expand the space strategy fund to one trillion yen and to provide agricultural support through the use of smart technologies incorporating AI. The panel is expected to compile a growth strategy next summer, focusing on crisis management investments aimed at strengthening the country’s economic security. END [Copyright The Jiji Press, Ltd.]