Japan PM pledges tax cuts to revive economy

Japan PM pledges tax cuts to revive economy

Tokyo: Japan’s new Prime Minister Taro Aso pledged to cut taxes to revive Asia’s largest economy, which is on the verge of recession.

The new leader, who supports spending to stimulate the economy, said that he would put economic growth before fiscal reform, in a departure from the efforts of previous governments to tighten the public purse strings.

“I will carry out a tax cut by the end of the current fiscal year" to March, Aso said in his first policy speech to parliament, without specifying by what amount.

“The objective of my cabinet is the prosperity of Japan," he said.

“Without economic growth, we cannot achieve fiscal reforms," he added.

Aso’s fledgling cabinet, which has already suffered its first resignation, earlier in the day approved crisis funding to revive Asia’s largest economy.

The cabinet approved $17 billion in funds to help consumers, companies and farmers cope with high fuel costs as well as the increasingly tough economic and financial climate.

“The economic measures are aimed at achieving economic growth by offering security to people who are suffering the impact of price hikes and an economic slowdown," Aso said.

“While keeping an eye on the US economy and global financial market, we are ready to take additional action flexibly whenever necessary," he said.

Japan’s economy posted its sharpest contraction in nearly seven years last quarter, while inflation is at its fastest pace for a decade.

Analysts say the government’s fiscal stimulus plan is unlikely to provide a significant boost to the overall economy.

But prospects for a more lavish spending package are restrained by Japan’s huge public debt, which is the highest among industrialised nations after a series of emergency spending packages during the 1990s recessions.