This Week’s “Nagata-cho” (17-24.Sep, 2013)

 Prime Minister Shinzo Abe and Finance Minister and Deputy Prime

Minister Taro Aso had a meeting on September 18 to discuss the 5

trillion yen of economic stimulus to relieve potential negative

economic impacts of the consumption tax hike to 8% scheduled in April

2014. Abe seemed to have requested to entail a large corporate tax

reduction, while Aso, eyeing keeping balance of the country’s finance,

is in favor of compiling a supplementary budget to simply aid

low-income brochures and to add public works projects.

 Likewise, there are different views on the budget and economic policy

within the Abe Cabinet. While Abe, Chief Cabinet Secretary Suga and

the economic and fiscal policy minister Amari are rather positive on a

corporate tax reduction with an eye to accelerate the nascent economic

circulation, Aso, leading the Ministry of Finance, and many members of

the ruling Liberal Democratic Party’s tax panel take the cautious

attitudes.

 Abe met Aso and Amari again on September 20 and agreed on the

framework of the 5 trillion yen of economic stimulus. It entailed (1)

expansion of corporate tax reduction and investment money to the

corporations which raised wages, (2) abolishment of the exceptional

corporate tax rate for reconstruction one year in advance of the

legislation, (3) maintaining the 35 trillion yen of reconstruction

fund until 2015, and to (4) entail measures in the economic stimulus

to make sure that the reduced tax would be reflected into wage

increases. While Aso suggested implementing the tax reduction from FY

2015, Abe didn’t accept the suggestion and postponed it to a next

meeting scheduled on September 30. Further, the economic stimulus will

likely entail other corporate tax reductions and deductions as well as

additional public works projects concerning the country’s roads,

tunnels, bridges, etc. Yet, there are persistent, cautious voices

toward the corporate tax reduction not only from the LDP itself but

its coalition partner New Komeito, so the LDP’s tax panel postponed

reaching a conclusion to its next meeting scheduled on September 27.

 Abe officially decided to reappoint all the LDP executive officers

whose terms are expiring this month and all the Cabinet ministers in a

meeting on September 17. Still, considering feelings of the party’s

young and middle-class lawmakers and their guardian faction leaders,

Abe will likely reshuffle the vice-ministers and parliamentary

secretaries on September 30.

 Abe Cabinet plans to submit bills to reform the civil service system

to realize a politically-initiated government in the next Diet session.

The bills include the ideas such as an establishment of Cabinet

Personnel Bureau to control nominations of about 600 high-class

officials, personnel evaluation and examination, training programs,

etc., or an increase of the advisory positions to Prime Minister from

the current 5 to 10. But since there are internal oppositions from

both the existing government ministries such as the National Personnel

Authority and LDP, underground negotiations and bargaining from

various grounds will likely continue for a little while.

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