Japanese House Approves Overhaul in Tax Laws; Goals of Reform, First in 40 Years, Are Fairness and Stimulation of Economy
The lower house of Japan's parliament today approved the first major overhaul of the country's tax laws in nearly 40 years, a major victory for Prime Minister Noboru Takeshita, whose government has been plagued by an insider-trading scandal.</br></br>The tax plan, which is intended to modernize a system put in place by the U.S. occupation in 1949, would lower and simplify income tax rates, reduce corporate tax rates and impose an across-the-board indirect sales tax-similar to a value-added tax-of 3 percent. The reform is intended to make taxation fairer and, in the short term, stimulate Japan's economy, although many Japanese fear it represents the first step toward higher taxes.</br></br>The six bills that make up the tax plan now move to the upper house, where the government is expected to prevail again.</br></br>Takeshita's trademark style of plodding, behind-the-scenes negotiation paid off, as his factionalized party stood firm behind the plan and the opposition allowed the debate and vote to take place without disruption or delaying tactics. Two previous prime ministers, including Takeshita's predecessor Yasuhiro Nakasone, had failed in their efforts to push similar measures through the Diet, as the Japanese parliament is known.</br></br>Takeshita, who has been in office a little more than a year, has called tax reform his top domestic priority. He could have bulldozed it through, relying just on the ruling party majority in the Diet. But Takeshita did not want to open his Cabinet to accusations of "tyranny by majority," a grave sin in consensus-conscious Japan.